One possibly unforeseen consequence of The Tax is that there is now likely to be very little hiring at a senior level for at least six months.
The issue, as someone kindly pointed out this morning, is that sign-on bonuses entered into between now and April 5th, will be subject to the new tax.
Given that most people are on three month notice periods and that most senior bankers will be unwilling to leave an existing position without securing a written guarantee that their stock will be bought out, this can be expected to depress hiring.
"What the government has done is to restrict job mobility," says Mike Warburton, a tax partner at accountancy firm Grant Thornton.
However, before recruiters throw all their toys out the pram, it's worth considering a few mitigating factors:
1) Bonus payments are generally being delayed this year. If bonuses don't hit bank accounts until February/March and people only hand in their notice after that, the tax won't really make much difference.
2) Bank HRs say they'll still pay for key hires. "At the end of the day, if you need to bring in the skills and there's an opportunity in the market, you're going to pay," says the head of HR at one US bank. "Most businesses are held to account by an EBITDA number, and the tax won't impact this."
3) Banks like RBS and Merrill Lynch are exempt from paying UK tax for years on the grounds of previous losses. As we reported earlier this week, the Conservatives have indicated that they may do away with the right to carry these losses over from one year to the next. It would therefore seem to make sense to use up any 'deferred tax assets' as quickly as possible (ie. to pay sign on and 2009 bonuses and absorb the tax).
4) There aren't really that many sign-ons around anyway. "The last time we bought people out was 2007-2008," says the head of HR at one investment bank. "There's not really much appetite for that now."