Goldman Sachs not to delay bonus payments

  • 15 January 2013
  • From the section Business
Media captionSir Mervyn King: "This must have an impact on the rest of society. It would be rather clumsy."

Investment bank Goldman Sachs will not delay annual staff bonus payments to take advantage of a forthcoming fall in the top rate of income tax, the BBC understands.

The decision comes after Goldman and its rivals had faced criticism after reports said they were planning to delay bonuses until after 6 April, when the 50 pence top tax rate falls to 45p.

Sir Mervyn King was one high profile critic of the suggested postponement.

He said it would be "depressing".


The Bank of England governor made his comments earlier on Tuesday before the Treasury Committee of MPs.

He added that any delay by the investment banks would be against the needs of wider society.

Sir Mervyn said: "I find it a bit depressing that people who earn so much seem to think it is even more exciting to adjust the timing of it to get the benefit of a lower tax rate... knowing that this must have an impact on the rest of society, when even now it is the rest of society which is suffering most from the consequences of the crisis.

"I don't know what will happen, and they haven't made any statement, but I think it will be clumsy and lacking in care and attention to how other people might react.

"In the long run, financial institutions... do depend on goodwill from the rest of society. They can't just exist on their own."

Sir Mervyn added that it would not be "unlawful" for the banks to defer their bonus payments.

BBC business editor Robert Peston said: "It is basic business nature to avoid higher tax if there is a simple way of doing so.

"So the global investment bank Goldman Sachs might not have expected the opprobrium heaped on it at the beginning of the week - from politicians and media - when it was disclosed that it was considering deferring bonus payments in shares - worth many tens of millions of pounds - to its bankers, so that they would benefit from the lower rate of tax."

Our business editor added that after Sir Mervyn entered the fray, and the Treasury informed Goldman that one of its ministers wanted a chat about the issue, "it is perhaps little surprise" that Goldman "thought it better of using the ruse".

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