Goldman Sachs Will Not Delay Paying Bonuses To Take Advantage Of Cut In Higher Rate Of Tax

Goldman Sachs has decided not to hold back investment bankers' bonuses until the new financial year to benefit from the cut in the top rate of income tax from 50p to 45p, which comes into effect on April 6.

The development emerged just hours after Bank of England Governor Sir Mervyn King delivered a broadside at anyone planning to defer their bonus in this way, which he said would be "depressing" and "lacking in care and attention" to the rest of society.

He warned banks that they risk losing public goodwill if they defer payments to exploit the cut in the top rate, announced by Chancellor George Osborne in last year's Budget.

Over the past few days, it became known that Goldman Sachs was considering holding back bonuses until after April 6, a move which could potentially cost the Treasury millions of pounds.

The company, which publishes its full-year results tomorrow and is expected to inform staff of 2012 bonus levels shortly afterwards, has declined to comment publicly on the issue.

But, according to people familiar with the process, the bank's compensation committee decided at a meeting today not to go ahead with the deferral.

Earlier, the King slammed bosses at Goldman Sachs for considering delaying bonus payments so its millionaire bankers can pay less tax.

Goldman was one of a number of City institutions contemplating deferring bonuses until after April 6th when the top rate of income tax drops from 50p to 45p.

Mervyn King said he found the proposed tactic "depressing" given the country's current economic situation.

In 2011 Goldman Sachs paid out nearly £8billion in bonuses

He said: "I find it a bit depressing that people who earn so much find it would be even more exciting to adjust their payouts to benefit from the tax rate, knowing that this must have an impact of the rest of society.

"I think it would be a rather clumsy and lacking in care and attention to how other people might react. And in the long run, financial institutions do depend on goodwill from society."

Such a move could cost the Treasury of millions of pounds.

King said that it would not be "unlawful" for banks to defer bonus payments in this way.

The chairman of the Commons Public Accounts Committee, Margaret Hodge, also condemned the reported move by Goldman Sachs.

"What we are seeing now is the immoral situation whereby people who earn a lot of money just believe it's cool not to pay tax," she told The Times.

"It fails to understand the importance of everyone contributing to the common good and Goldman Sachs just don't get it. They feel no responsibility for paying their fair share of tax."

His sentiments echoed those made in Westminster on Monday as Labour increased pressure on Chancellor George Osborne to prevent the "opportunistic money grab".

Chris Leslie accused the government of being "out of touch"

Chris Leslie, shadow Treasury minister, said: "It cannot be right that this out-of-touch government is making millions of working people and pensioners on modest incomes pay more while giving millionaires and bankers a huge tax cut.

'Banks need to think carefully about their own reputations if they seek to avoid tax in this way, but the ultimate responsibility lies with David Cameron and George Osborne."