UK Finance has released its 2024 banking sector tax report,
UK Finance has shared key insights in its latest estimate of the total tax contribution of the UK banking sector, produced by Big Four auditing and professional services firm PwC.
The detailed analysis shared by UK Finance in the report estimates the total tax contribution of the UK banking sector to “be £44.8 billion for the financial year to the end of March 2024, up from £41 billion the previous year.”
According to the update from UK Finance, this is notably the “highest” contribution since the study started a decade ago and “represented 4.7 per cent of total UK government tax receipts in the same period.”
The update from UK Finance also mentioned that the total is “made up of £24.1 billion in taxes borne, including corporation tax and the bank levy, and £20.7 billion in taxes collected, including income tax and employee national insurance contributions.”
The report from the industry body said that the UK banking sector has “contributed £10.8 billion in corporation tax (including the bank surcharge) and £24.9 billion in employment taxes.”
The UK Finance report further revealed that this “represents 12.2 per cent and 5.9 per cent respectively of the government’s total tax receipts in these areas.”
The UK Finance report also stated that “employment tax figure reflects the large number of highly skilled workers the banking industry employs across the UK.”
The report also looks at the total tax rate (TTR) of “a model bank operating in the UK and other leading global financial centres.”
According to the UK Finance report, this aims to provide “a holistic comparison of the tax environment in London compared to New York, Frankfurt, Amsterdam and Dublin.”
The 2024 total tax rate figures are:
- London – 45.8 per cent
- New York – 27.9 per cent
- Frankfurt – 38.6 per cent
- Amsterdam – 42.0 per cent
- Dublin – 28.8 per cent
The UK Finance report pointed out that this now “a notable difference in the London TTR and other European countries.”
The report also mentioned that a principal reason for the large variation is “the continued operation of the bank corporation tax surcharge and the bank levy in the UK.”
The UK Finance update added that this is in “contrast to the approach in the EU, where earlier this year, the Single Resolution Board confirmed that the EU’s Single Resolution Fund had reached its target level.”
David Postings, Chief Executive of UK Finance, said that financial services are one of the UK’s strengths and this report demonstrates “the banking sector’s important contribution to the UK’s tax base.”
They added that the sector also supports a ‘large number of skilled jobs across the country and is a key contributor to economic growth.”
The international comparison of bank taxation uses a model bank with “specific parameters to assess the total tax rate in key financial centres, based on enacted, or likely to be soon enacted, legislation.”