John Glen has promised that the UK’s financial services sector will benefit from “competitive tax rates,” ahead of the next Budget on 27 October, according to reports.
“To be competitive, we have to have competitive tax rates and that’s what’s on the chancellor’s mind at the moment,” the City minister told the Financial Times, which first reported the news, ahead of his visit to the US.
The banking sector is currently subject to an 8 per cent surcharge, first introduced in 2015, which Chancellor Rishi Sunak has previously said he would review in order to maintain London’s position in the global market post-Brexit.
The 8 per cent surcharge raised £1.5bn for the government in the 2019-20 financial year according to Reuters.
In addition to the surcharge, banks must pay corporation taxes – which apply to UK companies with annual profits over £250,000 – and these are set to rise from 19 to 25 per cent in April 2023, Sunak announced in his March Budget.
Separately banks also have to pay a 0.1 per cent charge on their UK balance sheets as a “bank levy” which was introduced in 2011 after the financial crisis. Glen suggested that the bank levy, which is reported to raise an additional £2.3bn annually, could be scrapped, according to The Telegraph.
The cap on bankers’ bonuses, introduced by the EU after the financial crash, will also be kept “under review”, Glen said though he added: “It’s not something we are imminently seeking to make an announcement on.”
The City minister was optimistic about the post-Brexit future of the UK’s financial services, pointing to a “booming” London following “the best year since 2014 in terms of equity raising and IPOs”.
“What I want,” Glen said, “is an efficient and effective marketplace for financial services in the context of the global marketplace.”
While he stopped short of confirming a cut to the surcharge by the Chancellor in his much anticipated Budget, Glen insisted: “We want to bring certainty to the industry.”
Banking trade body UK Finance were supportive of the Chancellor’s announcement earlier in the year to review the surcharge, and will continue to engage with HM Treasury on issues relating to the sector’s total tax rate and economic contribution, a spokesperson told City A.M.
“We believe the taxation system should seek to ensure the UK remains an attractive place to do business, is globally competitive and enables the UK banking and finance sector to support the economic recovery,” the spokesperson continued.
Both Glen and Sunak survived Boris Johnson’s reshuffle, with the former reaching almost five years in the role, making him the longest running City minister ever.
HM Treasury have been contacted for comment.