UK Finance publishes latest banking sector tax report

UK Finance has today published its latest total tax contribution of the UK banking sector report, produced by PwC.

The report shows that the UK banking sector generated £38.8bn in taxes in the financial year to the end of March 2022. This means that the sector accounted for 4.7% of the government’s total tax receipts during that period.

The total contribution is comprised of £18.8bn in taxes borne – those that are a direct cost – and a further £20bn in taxes collected, such as income tax and employee national insurance.

Total employment taxes accounted for £21.9bn of the total taxes contributed by the sector, equivalent to 6.3% of all UK employment tax receipts. This reflects the large number of highly skilled workers employed in the banking industry.

The report also includes analysis of the UK’s tax competitiveness for banking relative to other leading global financial centres. London (45.3%) currently has a similar total tax rate for a typical corporate and investment bank as Frankfurt and Amsterdam (both 45.4%), but higher than New York (27.4%) and Dublin (32.1%).

The report also contains forecasts of the total tax rates in 2024. For London, the forecasts are based on an increase in corporation tax from 19% to 25% and include potential scenarios for the bank surcharge paid by firms on UK profits.