City Bonuses 2025: Expect Higher Payouts & FT Reader Survey

City workers in the financial sector are anticipating a potentially significant increase in bonuses this spring. This expectation stems from recent regulatory changes and a generally positive market performance, though the distribution of these gains may vary across different roles and sectors.

Regulatory Shifts and Market Performance

The upcoming bonus round will be the first to fully reflect changes made last October that shorten the deferral periods for banker bonuses. These adjustments relax rules put in place following the financial crisis. Jason Hollands, managing director of Evelyn Partners, noted that “despite all the uncertainty around tariffs, 2025 turned out to be a fantastic one across most markets, although returns were quite concentrated,” with strong performance in big tech, banking, and commodities.

Did You Know? Shares in NatWest, Barclays and HSBC have all increased by 50 per cent or more over the past 12 months.

Sectoral Variations

While optimism is widespread, the benefits aren’t expected to be uniform. UK tax professionals and wealth managers have experienced high demand for their services, while fund managers have faced challenges as passive investments continue to outperform. The weak UK IPO market also presents a “headwind on lucrative fees” for investment bankers, lawyers, and consultants, according to Hollands.

Deferred Stock and Potential Payouts

Bankers who hold share awards deferred from previous bonuses are particularly well-positioned to benefit. Adam Walkom, co-founder of Permanent Wealth Partners, explained, “The biggest factor this year is a lot of deferred stock is now looking much healthier given the run up in bank share prices.” This increase in stock value could translate into substantial profits for senior staff.

Expert Insight: The relaxation of bonus deferral rules, combined with rising bank share prices, creates a scenario where senior staff may have quicker access to larger payouts, potentially impacting spending habits within the City and related industries.

Looking Ahead

Several factors could influence how bonuses are ultimately used. Readers may seek to maximize salary sacrifice on pension contributions before new restrictions take effect, as well as navigate changes to venture capital trust (VCT) tax advantages. The ongoing squeeze on income tax thresholds may also prompt some to consider relocating overseas to improve their financial prospects.

Last year’s Financial Times poll indicated that over half of respondents received larger bonuses than the previous year, but also reported increased workloads and challenges related to tax increases and altered performance metrics. The Financial Times is again surveying readers to gauge expectations for the current bonus season, with a deadline of Sunday, February 8.

Frequently Asked Questions

What regulatory changes are impacting bonuses?

Changes announced last October cut the length of bank bonus deferral periods, relaxing rules introduced after the financial crisis.

Which sectors are expected to see the largest payouts?

Big tech, banking, and commodities stocks have performed strongly, suggesting potentially larger payouts in those sectors.

What is the deadline to participate in the Financial Times bonus survey?

The deadline to complete the anonymous survey is Sunday, February 8. Queries can be directed to [email protected].

How might these anticipated bonus payouts influence investment and spending patterns within the financial sector?