UK bank lobby cites 46.2% London tax rate, omitting Paris data

UK Finance promoted a report this week showing a 46.2 percent total tax burden for banks in London, the highest figure in a five-city comparison. The banking group, which represents major lenders including Lloyds, JP Morgan, and Revolut, warned that higher taxes in next week’s budget could force firms to shift jobs and business to rival centers. The data comes from an annual study by the accountancy firm PwC, which aggregates corporation tax, social security, VAT, and specific bank levies into a single percentage. Other cities in the comparison include Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent.

The omission of Paris has drawn sharp criticism because the French capital hosts numerous investment banks, including Goldman Sachs and Barclays. Independent calculations reviewed by a leading accountancy firm estimate that a bank in Paris would face a total tax rate between 51.6 percent and 57.3 percent. That figure is up to 11.1 percentage points higher than the rate calculated for London. UK Finance told Chancellor John Healey in a letter that it could not generate a consistent like-for-like figure for Paris using its specific model bank. The group maintained that retaining the same five cities allows for consistent year-over-year comparisons.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He argued that the data does not reflect the actual taxes paid by Britain’s big banks, which he believes are likely lower than those of many competitors. Nowak added that the TUC proposes raising the bank surcharge from 3 percent to 8 percent, a change that could raise 2.25 billion pounds per year. He stated that the Chancellor has a responsibility to ask those benefiting from windfall profits to pay a fairer share.

Simon Youel, head of policy at Positive Money, questioned whether Paris was left out to allow UK Finance to claim the City contributes more tax than any other global financial sector. Youel expressed hope that the Chancellor would follow other countries in raising bank taxes to recoup profits generated by higher interest rates. The campaign group noted that the methodology of the report has become a focal point of the debate ahead of the fiscal event.

Banking leaders have offered mixed reactions to the potential tax increase. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact would be bearable and gave the Chancellor his full support. In contrast, Jamie Dimon, head of JP Morgan, warned in May that the bank could scrap plans for a new 3 billion pound London headquarters if Britain became hostile to banks. Dimon met with Andy Burnham and Healey last month to warn that further levies could put investment and jobs at risk.

A Treasury spokesperson said decisions on tax are a matter for the Chancellor to set out at fiscal events. The department noted that it does not routinely comment on rumors, speculation, or proposals. PwC has been contacted for comment regarding the methodology used in the report.