Eviction notice .... Last ditch raid on the City

Yesterday's pre-budget report carried a very unwelcome pre-xmas message for City bankers, identifying the new staggering 70% tax on bonuses.

A one off 50% tax on bonuses will combine with income tax and national insurance to devour more than two third of every discretionary bonus awarded in the Square Mile between now and April.

The tax which falls on payouts above £25,000 is likely to affect upwards of 20,000 bankers. The 50% is to be paid by the bank and not the individual.

Tax experts are warning that a clampdown of this level could cause an exodus of non-domiciled executives to other financial centres like Singapore and Geneva, stripping the UK of its talent.

The treasury is also planning a crack down on any banks trying to get around the measure, by hiking base salaries  in the short term, imposing penalties on any culprits.

Stuart Fraser, policy chairman at the City of London Corporation, said: "An excessively punitive approach towards remuneration will benefit nobody. A broad brush taxation policy risks encouraging the 250 overseas banks based in the City to reconsider their commitment to the UK."

Angela Knight of the British Bankers' Association said: "Viewed from the outside, London may well now look like a significantly less attractive place to build a business."

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