Contribution to government tax receipts 

The analysis 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. 

This is 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.

Contribution breakdown 

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 UK banking sector contributed £10.8 billion in corporation tax (including the bank surcharge) and £24.9 billion in employment taxes. These represent 12.2 per cent and 5.9 per cent respectively of the government’s total tax receipts in these areas. The employment tax figure reflects the large number of highly skilled workers the banking industry employs across the UK.

International comparison 

The report also looks at the total tax rate (TTR) of a model bank operating in the UK and other leading global financial centres. 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 

There is now a notable difference in the London TTR and other European countries. A principal reason for the large variation is the continued operation of the bank corporation tax surcharge and the bank levy in the UK. 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.

Graphic: Total Tax Rate for a model bank in 2024/25 and 2023

David Postings, Chief Executive of UK Finance, said:

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. The sector also supports a large number of skilled jobs across the country and is a key contributor to economic growth.

Banks based in the UK pay a significantly higher rate of tax than those in New York and, because contributions to the EU’s Single Resolution Fund have now been suspended, they are expected to pay notably higher rates of tax than in other European capitals. The overall tax environment has an important bearing on investment decisions and growth and is something that needs to be considered in terms of our international competitiveness.