Why crippling taxes may soon dissuade all but fairly junior bankers from staying in London
Is the City soon to become a Mumbai-like centre for back office bankers and junior spread sheet jockeys? Maybe. As KPMG research published in the Wall Street Journal (and reproduced below) shows, taxes in London will soon become punitively high for all but junior/mid-ranking bankers.
The message seems to be that as long as you earn less than 250k, net compensation in the City after the April tax hike won't be too bad compared to other financial centres globally.
However, once you start earning 500k or more, it's looks like time to get out - if you earn 500k and are insistent on staying in London post April, you will be paying 160k more in tax each year for the privilege than if you lived in Hong Kong; if you earn 1m, you'll be paying 385k more.
It's easy to see why Steve Ashley decided to leave RBS for a Hong Kong posting at Nomura.
Net income remaining after employee tax and social security charges for single male earning 250k (100k salary, 150k bonus)
Frankfurt: 134k
Paris: 137k
London, post April 2010: 142k
Geneva: 146k
New York: 148k
London today: 153k
Zurich: 158k
Hong Kong: 212k
Dubai: 250k
Net income remaining after employee tax and social security charges for married person with 2 children, earning 500k (150k salary, 350k bonus)
London, post April 2010: 264k
Frankfurt: 277k
Geneva: 280k
Paris: 286k
New York: 294k
London today 301k
Zurich: 308k
Hong Kong: 424k
Dubai: 500k
Net income remaining after employee tax and social security charges for someone earning 1m (250k salary, 750k bonus)
London, post April: 509k
Frankfurt: 530k
Geneva: 539k
Paris: 554k
New York: 575k
Zurich: 592k
London today: 596k
Hong Kong: 849k
Dubai: 1,000k
(There are some fairly complex notes which explain how KPMG arrived at these figures. We haven't included them here, but they can be read along with the Wall Street Journal's article on the subject).
