BKM504850 - The Code commitments – tax planning: remuneration packages and the meaning of “proper amounts of tax”

Paragraph 3.3 of the Code says, ‘Remuneration packages for bank employees, including senior executives, should be structured so that the bank reasonably believes that the proper amounts of tax and national insurance contributions are paid on the rewards of employment.’

In the past, there were many examples of arrangements whereby employees were remunerated in ways which were intended to escape tax and/or national insurance contributions. These types of arrangement are contrary to the Code.

As with paragraphs 3.1 and 3.2, the test is whether the bank reasonably believes that the proper amounts of tax and national insurance contributions are being paid. In practice, this will involve asking whether or not the result of a proposed arrangement is contrary to the intentions of Parliament.