§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer what was the annual cost to the Exchequer of(a) bonus payments to employees paid gross of tax, in terms of the interest opportunity cost to the Exchequer and (b) bonus payments paid by employers in such a way as to temporarily or permanently avoid paying employers' national insurance contributions on such payments.
§ Sir George YoungIn the Finance Act 1994 and subsequent regulations, the Government introduced measures to counter the avoidance of pay as you earn and national insurance contributions. These measures are expected to end the deferral of about £300 million in PAYE tax and the avoidance of about £75 million of NICs.
These costs relate to all forms of remuneration paid to employees by their employers. Employers are not required to identify bonus payments separately from other payments, and figures on bonus payments could be obtained only at disproportionate cost.
Since these measures were introduced, the Secretary of State for Social Security has announced further measures to combat other NIC avoidance devices.