London Bank Tax Rate of 46.2 Percent Excludes Paris Data

UK Finance is pushing the Treasury to hold bank taxes steady ahead of next week's budget by citing a new report from PwC. The group, which represents major institutions including Lloyds, JP Morgan, and Revolut, argues that London currently imposes the highest total tax burden on large banks among global financial centers.

The annual analysis calculates the combined weight of corporation tax, social security, VAT, and bank levies. The data shows a total rate of 46.2 percent for a model bank in London. This figure exceeds rates in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. UK Finance sent a letter to Chancellor John Healey featuring these numbers to support its position against a tax hike.

Critics point out that the report omits Paris, a key competitor that hosts firms such as Goldman Sachs and Barclays. Independent calculations reviewed by an accountancy firm estimate that a bank in Paris faces a total tax rate between 51.6 percent and 57.3 percent. That is up to 11.1 percentage points higher than the London rate cited by the lobby group.

UK Finance stated it considered including Paris but could not produce a comparable figure using its specific model. The group said it kept the same five cities in the report to maintain consistency over time. It noted that in previous editions, jurisdictions like Frankfurt had higher tax rates than the UK, suggesting the ranking can shift.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He said the data does not reflect the actual taxes paid by large British banks, which he believes are likely lower than those of competitors. Nowak argued that the Chancellor has a duty to ask those benefiting from windfall profits to pay a fairer share, especially as millions struggle to make ends meet.

Simon Youel of Positive Money questioned the methodology. He asked whether Paris was left out to allow UK Finance to claim the City contributes more tax than any other global sector. Youel said he hoped the Chancellor would follow other countries in raising bank taxes to recoup profits generated by higher interest rates. The TUC proposed that increasing the bank surcharge from 3 percent to 8 percent would raise 2.25 billion pounds per year.

Banking leaders offer mixed views on the potential impact. CS Venkatakrishnan of Barclays said the financial hit from a tax rise would be bearable. Jamie Dimon of JP Morgan warned in May that the bank might cancel plans for a 3 billion pound London headquarters if Britain became hostile. Dimon met with Healey and Andy Burnham last month to warn that further levies could jeopardize investment and jobs. A Treasury spokesperson said tax decisions are for the Chancellor to decide at fiscal events.