UK banks pay 71 pc profit in tax
THE biggest UK banks paid 71 per cent of their combined profits in taxes, KPMG analysts said yesterday, with 58 per cent going to levies like corporation and overseas taxes, and 13 per cent on the bank levy.
And repeated hikes to the bank levy are draining lenders of crucial funds they could use to rebuild capital buffers and increase lending, the consultancy warned.
The levy was first touted as a way to discourage banks from relying on risky wholesale funding, making them slim down after the crisis.
But it has been hiked up to twice a year since then, in an effort to make sure the charge brings in £2.5bn each year, even as banks got smaller.
“Overall risk in the UK banking sector has now decreased with many banks having made substantial reductions in the size of their balance sheets,” said KPMG’s Tom Aston. But “the rate of the tax has been increased seven times now to try to maintain the tax take. Our figures show the levy is now draining profits out of the banks and undermining efforts to strengthen their capital base.”