Senior bankers still earn double the money
Senior bankers still earn double the money in London than Geneva despite April tax rises
Exodus of London bankers to Switzerland unlikely
Base salaries in London increased to avoid bonus tax
Senior bankers still typically earn twice as much after tax in London than in rival financial centre Geneva and Zurich, according to research by Selby Jennings, the financial recruitment specialist. This is despite the new 50% tax rate for workers earning more than 150,000 per annum which came into force this April.
Even for mid-level investment banking roles, such as quantitative analysts and junior traders, bankers will still earn between 15-25% more in London than Geneva or Zurich after tax.
According to Selby Jennings, the research suggests that far fewer London-based bankers are likely to decamp to Geneva or Zurich because of tax rises in the UK than had been feared.
Adam Buck, Managing Director at Selby Jennings, comments: Geneva and Zurich are relatively small financial centres compared to London. In reality there are relatively few senior banking roles in Switzerland paying over 150,000. London and New York are the only markets large enough to offer those roles in any significant quantity.
Bankers earning enough to be caught by the 50p tax rate will find far fewer job opportunities in Switzerland compared to London. Its a very competitive jobs market with employers having a large number of good candidates to choose from. If anything an influx of candidates will hold back pay growth in Geneva and allow London to pull further ahead.
He adds: Switzerland has a competitive advantage in some wealth management and commodities roles, but in many of the highest paying jobs, across the rest of global and capital markets, London is some way ahead of Switzerland.
Calculations by Wilkins Kennedy, the Top 25 accountancy firm, show that some of the highest paid British bankers will pay 48.7% of their entire income in tax and National Insurance this year. The highest paid bankers in Geneva will pay marginally less of their income in tax (41%), according to calculations by Swiss accountancy firm, Revitrag Treuhand.
Salary & bonus
Pay after tax and NI
Salary & bonus
Pay after tax
Equities researcher (1-2 yrs exp)
Quant analyst (4 yrs exp)
Commodities trader (3-4 yrs exp)
* Salary data provided by Selby Jennings. UK tax calculations by Wilkins Kennedy. Swiss tax calculations by Revitrag Treuhand
Selby Jennings says that because bankers in London are usually paid considerably more than their counterparts in Geneva and Zurich, UK taxes would have to be significantly higher to justify moving to Geneva or Zurich on financial grounds.
Adam Buck, Managing Director of Selby Jennings says: These figures suggest that London based bankers are unlikely to decamp en masse to Geneva as a result of the new 50p tax rate. Despite the UKs increasingly punitive tax regime, the highest paid bankers will still be significantly better off working in London.
He adds: The floodgates may not be open just yet, but Londons competitive advantage over rival financial centres is narrowing. The new Government will need to keep a tight rein on banker-bashing and resist further tax rises on high earners if the UK financial services sector is to thrive.
Peter Goodman, Partner at accountants Wilkins Kennedy, comments: The recent Gaines-Cooper ruling highlights the problems of moving to Switzerland to escape the UK tax net. To remove yourself from the UK tax system you have to be working abroad for at least a full tax year. You must make a clear break in your work and family life which for many people who have family and friends in the UK, is not an attractive option.
"The attractive expat packages, cost of living allowances and tax breaks available to those foreign nationals on short term assignments in London, means that the City is likely to remain a top location for international bankers."
Peter Kraus of Swiss accountants Revitrag Treuhand says: There is a perception that Geneva is a low tax jurisdiction, but until recently taxes were almost as high as in London. High earning bankers can expect to pay about 41% of their income in tax, so Geneva is hardly a tax haven.