Re-posting my comment from the Guardian thread that came up earlier ( <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=10371728" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=10371728</a> )<p>Corporation tax in the UK is payable on &#x27;profits subject to corporation tax&#x27;. In laymen&#x27;s terms this is roughly equivalent to to accounting profit.<p>Employee salaries, bonuses, etc are generally deductible; if you pay me 50K, that&#x27;s 50K out of your bottom line.<p>The employees in question likely pay a variety of taxes including but not limited to the standard income tax. In an extreme scenario (recent graduate + highest tax band) that could be 61% rate.<p>(For comparison, the 2015 rate for Corporation Tax is 20%; so as far as the Exchequer is concerned, a salary payment is preferable, at least in immediate terms).<p>In summary, I think there&#x27;s a discussion to be had here about abuse of taxation frameworks but the headline here is bait; the bonuses are irrelevant, any oddities regarding transfer payments etc. are what should be focused on.<p>edit: My position on taxation in general is that we should be focusing on Capital Gains Tax (taxes the gain on appreciation of assets such as shares) and Income Tax (taxes income from sources such as employment, share dividends).<p>Taxing corporations seems like it can only ever be arbitrary at some level, because they don&#x27;t.... &#x27;exist&#x27;, for lack of a better term. They can be ephemeral, relocate, etc.