The UK is set to overhaul the way bonuses are paid to senior bankers, cutting the time executives must wait to receive payouts in a move designed to enhance the City’s global competitiveness and stimulate wider economic growth.
From 16 October 2025, the deferral period for top bankers’ bonuses will be halved from eight years to four, with a portion of payments permitted from year one.
The threshold for deferring a large share of pay will also rise to £660,000, while restrictions on how bonuses are divided between cash and shares will be eased.
The changes represent one of the most significant updates to post-financial crisis remuneration rules and mark a clear shift in the UK’s approach to attracting and retaining financial talent.
UK INVESTMENT
Regulators hope the reforms will encourage banks to expand operations in London and channel more investment activity through the UK.
The updated framework will apply to both upcoming and outstanding, but as yet unpaid, bonuses – affecting the 2025 bonus round and beyond.
Treasury officials argue that the move brings the UK closer in line with international markets, where shorter deferral periods are already standard practice.
NOT WOLF OF WALL STREET
Alex Davies, Chief Executive of Wealth Club, reckons the reforms are unlikely to unleash “Wolf of Wall Street scenes” in the Square Mile but described them as a “smart move for the UK economy nonetheless.”
He says: “Quicker payouts don’t just mean faster tax receipts for the Treasury – they also unleash spending power straight into the real economy.
“From property and home improvements to restaurants, holidays, and retail, these payments support jobs across a wide range of industries.
“Many bankers also back UK start-ups with their bonuses, helping to fund innovation, build companies, and create employment.”
Davies adds that the reforms signal that “Britain is open for business,” while maintaining safeguards to prevent a return to pre-crisis excesses.
“It’s about encouraging growth while keeping the system safe,” he adds.
