Banks in the UK stumped up almost £40bn for the Treasury coffers in the last year as the tax burden facing lenders mounted.
Taxes borne by the banking sector have soared by 50 per cent over the past five years, according to a report out today from trade body UK Finance and accountancy giant PwC.
The report warned that the UK’s fiscal competitiveness for banking business has slipped relative to other global financial centres, with London having a higher total tax rate for a typical corporate and investment bank when compared with financial rivals New York and Frankfurt.
Stephen Jones, chief executive of UK Finance, called for “a rethink of bank taxation policies that prioritises our global competitiveness”.
In the year to March 2019, banks in the UK paid £39.7bn in taxes, half of which was paid by foreign-headquartered banks, accounting for 5.5 per cent of total UK tax receipts.
Sector-specific policies such as the bank corporation tax surcharge and bank levy, coupled with the irrecoverable VAT, has driven the rise in contributions over recent years.
“While banks operating in the US have benefited from a recent reduction in the rate of corporate income tax, changes in recent years in the UK have increased the taxation burden on the banking industry,” the report said.
UK Finance said that “maintaining fiscal competitiveness is more important than ever” following a turbulent year for the banking industry, which has been rocked by geopolitical uncertainty, regulatory pressures and technological disruption.