• Banks? total tax contribution up from £34.2bn in 2015/16
• £18.1bn paid by UK banks with £17.3bn coming from foreign banks
• Employment taxes remain the largest tax for the banking sector

• Banks? total tax contribution up from £34.2bn in 2015/16
• £18.1bn paid by UK banks with £17.3bn coming from foreign banks
• Employment taxes remain the largest tax for the banking sector

The total tax contribution of the banking sector to the UK public finances in 2016/17 was an estimated £35.4bn (5.4% of total government tax receipts), a report published today shows.

The report - commissioned by UK Finance and based on analysis by PwC - shows that £18.1bn of the sector's tax contribution came from UK banks. £17.3bn was contributed by foreign banks. Taxes borne - those that are a direct cost to a company - accounted for £19.0bn of the total while taxes collected made up £16.4bn.

This year's survey included the impact of the bank surcharge, introduced in January 2016, which generated £1.1bn in payments from the sector. The introduction of the surcharge, along with an increase in corporation tax resulting from increased profitability, loss relief and compensation payment restrictions, drove an 11% increase in taxes borne in 2016/17.

Receipts of corporation tax, the bank levy and the surcharge (£8.9bn combined) are 22% higher than corporation tax receipts before the financial crisis (£7.3bn in 2007).

Andrew Packman, Tax Transparency and Total Tax Contribution (TTC) partner at PwC, said:

This report shows that the banking sector makes a significant contribution to the UK's public finances. Tax contributions have recovered consistently since the financial crisis.

While the sector is in a strong position to face future challenges, this report underlines the importance of the banking sector and the need to ensure that the UK retains its strong position as a leading financial centre.

The study helps provide transparency of the contribution of the sector to both the public finances and employment, illustrating its commitment to the UK and efforts made to increase its footprint.

Employment taxes remained the largest tax for the banking sector, making up £18.4bn of the total contribution, up from £17.8bn last year. Of this, 53.7% was paid by foreign banks which employed 25.3% of the employees in the study. The report found that the banking sector creates employment for 1.6% of the UK workforce and contributes 7.2% of all UK employment tax receipts. An estimated £4.5bn was paid by the UK banking sector in irrecoverable VAT.

UK Finance CEO, Stephen Jones, said:

The UK's public purse is significantly bolstered by the banking sector and of course if you include the broader financial services sector the contribution is even more substantial.

As well as the considerable tax and employment levels highlighted in PwC's report, the banking sector is also a crucial customer for other tax paying and employment generating industries in the UK - from lawyers to accountants

This report is timely as it shines a light on the importance of agreeing a post-Brexit settlement that supports the sector, and crucially the non-UK banks who have chosen to base themselves here to serve UK and European customers.

Isabelle Jenkins, banking and capital markets leader at PwC, said:

These figures reflect the banking sector's position as a significant provider of jobs and a major contributor of tax.

Looking to the future, PwC supports a post-Brexit vision for the banking industry which would see strong UK-wide value generation, with greater participation of regions and nations and spread of benefits.

London will still be one of the most important and attractive international centres for banking and global business. But to capitalise on the nationwide talent and technological evolution across the UK, the banking sector must look further afield than the City's Square Mile.

Specifically, regional and national banking centres will continue to develop, supported by a strong supply of local talent with relevant skills, competitive costs and high productivity.