Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

UK banks urge government to ease tax burden as Brexit beckons

Published 10/29/2019, 09:15 PM
Updated 10/29/2019, 09:15 PM
© Reuters. Canary Wharf and the City of London financial district are seen from an aerial view in London

By Huw Jones

LONDON (Reuters) - Banking in Britain paid 40 billion pounds ($52 billion) in taxes in the last financial year with half from foreign lenders, underscoring the need for a government rethink on taxes to keep London competitive after Brexit, UK Finance said on Wednesday.

Banks and their employees paid a total of 39.7 billion pounds in taxes, or 5.5% of government receipts, unchanged from the prior year, UK Finance said in a review compiled by consultants PwC (see graphic).

The tax raised was roughly split between those paid by employees, and the corporate tax, surcharge on profits and balance sheet levies paid by the lenders themselves.

The surcharge and levies were introduced after Britain had to bail out lenders with public money during the financial crisis a decade ago.

Britain's "fiscal competitiveness" has declined relative to other global financial centres like New York, where banks have benefited from recent cuts in corporate taxes, the review said.

Many banks operating in Britain have opened European Union hubs in cities like Frankfurt to ensure continuity of service for EU customers after Britain leaves the bloc.

Banks are moving about a trillion euros in assets from London to their new subsidiaries, which is likely to lead to a loss of some UK tax revenue.

The review estimated that the total tax rate for banks in London is 47.1%, compared with 44.7% in Frankfurt and 33.5% in New York.

"In this context, maintaining fiscal competitiveness is more important than ever," the review said.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"This is also vital to ensure a healthy domestic banking market which can continue to provide credit to support future growth of the UK economy."

UK Finance Tax Graphic: https://fingfx.thomsonreuters.com/gfx/mkt/12/7933/7864/UKFinancetax.png

The review also showed a fall in headcount at UK-headquartered banks due to restructuring, and customers using online and mobile banking.

While foreign-heaquartered banks hired more staff, this was due to getting ready for Brexit, implementing IT changes and mergers, and is unlikely to be indicative of the long-term trend, the review said.

The sector overall employed 342,413 people, it added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.