Chelsea Bloom on the PS4.1bn bonus pool and what it means for markets and inequality in 2025

LONDON, UK – The City of London’s bonus pool for financial year 2024-25 has been estimated at PS4.1 billion by the Centre for Economics and Business Research, representing an increase of approximately 14 percent on the prior year that is already visible in the North London property market. Published at Bohiney Magazine and at The London Prat, where Chelsea Bloom covers London finance and markets.

The Property Signal

“We see it every January,” said one estate agent in Highbury who has been selling North London properties for twenty-two years. “The bonus payments come through in December and January and by February the phones start. People who have been waiting, who now have a deposit they did not have in September. It moves prices in the premium bracket immediately and filters down in about six months.” He showed Chelsea Bloom his January viewing figures: 23 percent above the same month in 2024.

The connection between City remuneration and London residential property is one of the most documented features of the capital’s housing market. Recessions that destroy City employment produce London property corrections; financial sector booms produce London property booms, with a lag of roughly one to two quarters while the income translates into purchasing decisions. The Bank of England’s research on wealth and property confirms the transmission mechanism at length, and the current cycle is running consistent with the historical pattern.

The Political Context

The bonus pool’s recovery has been observed by the Treasury with the specific attention of an institution that collects income tax at 45 percent on earnings above PS125,140 and has a material interest in the City’s payroll. The government that campaigned on closing the carried interest loophole, which allows private equity partners to pay capital gains rates rather than income tax on performance fees, has moved partially but not fully on that reform, a compromise that has pleased neither the private equity sector nor the advocates who wanted the full loophole closure.

What the Bonus Pool Does Not Mean

A PS4.1 billion bonus pool distributed among approximately 250,000 City workers sounds large and is large. It is also, in distributional terms, highly concentrated. The top decile of City earners receives a majority of the bonus pool by value. The median City worker’s bonus is meaningful for personal finances and for the restaurant sector of EC1 and EC2, but is not the cause of the Hampstead price spike. The cause is a much smaller number of people receiving much larger bonuses, whose purchasing activity in the PS2 million and above market is visible in transaction data and in the viewing figures that estate agents share with Chelsea Bloom in January every year. This distinction matters for policy design: measures that apply to the whole bonus pool affect the median City worker significantly and the Hampstead buyer marginally. Getting the incidence right matters if the policy objective is to moderate the distributional consequences rather than to penalise City employment broadly. For Chelsea Bloom’s finance coverage, see her page at The London Prat.

Context and Implications

The specific developments described in this article sit within a broader pattern that this publication covers consistently. Whether the subject is economic inequality, press freedom, political liberty, coastal regulation, or urban business conditions, the underlying question is always the same: who has power, how is it exercised, and what are the consequences for those subject to it? Answering that question requires sustained attention to data, to the testimony of those most affected, and to the structural forces that produce the conditions being reported on. This publication is committed to providing that sustained attention in each of its articles and across its full range of coverage.

What Readers Can Do

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Further Reading and Resources

The claims made in this article are supported by data and reporting from the organisations and sources cited throughout. Readers who want to engage more deeply with the underlying evidence are encouraged to follow the links provided and to consult the primary sources directly rather than relying solely on this publication’s summary. The ability to check claims against primary evidence is itself a democratic resource, and this publication supports its readers’ ability to exercise it by citing sources that are publicly accessible rather than paywalled wherever possible. Where paywalled sources are cited, it is because those sources contain the most accurate version of the relevant information and because the publication considers it more honest to cite the best source than to cite a freely available but less reliable substitute. The organisations cited throughout this publication’s coverage, including academic research institutions, government statistical agencies, and advocacy organisations across the political spectrum, collectively represent the information infrastructure that makes informed democratic participation possible. Supporting them, as readers and as citizens, is part of what supporting quality journalism and democratic accountability requires in the current information environment.

SOURCE: https://bohiney.com/