When Bank Bonuses Were Paid in Gold Bars, Fine Wine and Rugs

With the British government already having printed £375bn and the possibility of more printing to come, now may seem a very good time to collect your bonus in the form of gold bullion. Unfortunately, this option isn't currently on offer. However, it was - once.

"There was a period from the early to the late 1990s when it was very common to pay investment banking bonuses in London in the form of gold bars or coins," says Mike Warburton, a tax partner at accounting firm Grant Thornton. "It was a big movement for around eight years - we also gave people bonuses in oriental carpets or fine wines," he recalls

John Whiting, tax policy director at the Chartered Institute of Taxation also recollects the bullion-bonus period. "In the early 1990s, a lot of banks used to pay in gold bars. It was driven by a change in employers' national insurance which was previously capped and suddenly levied on the entirety of bankers' salaries. As soon as national insurance became unlimited, banks looked for ways of sidestepping it."

Bullion wasn't banks' first choice of payment method. When the employers' national insurance cap was first removed, Warburton says banks began by paying people in Rolls Royce shares, followed by unit trusts. Gold bars only became popular after these two methods were brought under the national insurance umbrella.

Unfortunately, gold bar bonuses came to an end in the late 1990s. "All these things worked for a few years and then they were blocked by the government," Warburton says.

Now, any form of successful tax mitigation is difficult to achieve - as adduced by JPMorgan's large historical income tax bill on its failed employee benefit trust scheme.