In any usual year, Rothschild’s UK bankers would be getting excited about their forthcoming bonuses around now. But this is not a normal year; it’s an election year, and Rothschild took precautionary measures.
Rather than paying its UK staff in early June as usual, headhunters say Rothschild paid its bonuses in April – well before the UK election and safely within the 2014 tax year.
The Financial Times reported that the UK bank was contemplating changing the payment date back in February. However, at that time it wasn’t clear whether the bank was going to go ahead.
Recruiters say it definitely did. And with good reason.
Analysts at Deutsche Bank pointed out that an election victory for the Labour Party would have subjected London bonus payments to punitive levels of taxation. The Labour government was proposing a 50% bonus tax on all payments above £25k, along with a marginal tax rate of 50% on all income above £150k. For every £50k in post-tax bonuses that banks in the UK paid their staff earning £150k+, they would therefore have incurred a pre-tax operating cost of £150k.
Rothschild declined to comment on its bonuses. Given the result to the election, its precautions were unnecessary. As a result, London staff will have to go 14 months instead of the standard 12 until next year’s payment.