The Tax Man Kills a Christmas Turkey

Ah, tradition: hanging the stockings, trimming the tree, and most importantly, avoiding taxes on the Christmas bonus. In the City, London's financial district, top executives expect the Christmas goose to lay a regular golden egg. Back in 1986, when the government started making employers pay a National Insurance tax on all bonuses, those million-pound incentives became very expensive — and accountants quickly went to work like so many tax-avoiding elves.

"In the early stages," says Mike Warburton, from accountant Grant Thornton, "it was like taking candy from a baby." Firms got downright epicurean in their efforts to...

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