9th November 2016

2016 Total Tax Contribution of the UK banking sector

The banking sector contributes to the UK economy in many ways. Paying tax is an important element of that contribution but there has historically been little robust data on the contribution made by the banking sector in taxes. The first Total Tax Contribution study of the sector, carried out in 2015, provided useful evidence and highlighted that the contribution extends beyond corporation tax to include irrecoverable VAT, bank levy, stamp duties and employment taxes.

While this report quantifies the current Total Tax Contribution of the banking sector, the future contribution to the public finances is in doubt. Increased capital and liquidity requirements as a result of tightening regulation coupled with persistent low interest rates have led to a structural change in the sector compared with the pre-crisis era. Falling levels of return on equity and gross value added call into question the sustainability of tax payments from the sector in the future.