Banks in Britain paid $42bn in tax last year

Bloomberg

Banks in the UK paid 34.2 billion pounds ($42 billion) in tax in the latest fiscal year, 9 percent more than a year earlier, reflecting an increase in the levy on balance sheets and changes to corporation tax, a report from the British Bankers’ Association showed.
Receipts were evenly split between domestic and international lenders, with the former paying 17.4 billion pounds and the latter 16.8 billion pounds in the year through March 31, according to the report, which was produced by PricewaterhouseCoopers and based on data from 36 firms. The bank levy raised 3.4 billion pounds, an increase of
54 percent from 2014, after the
rate was hiked by the previous
government.
Tax has played a key role in the City of London’s post-Brexit lobbying efforts as banks pressure the government to secure a special deal allowing them to continue to sell services in the European Union’s single market, known as passporting. Some lawmakers have already said they’re likely to lose this right.

‘Tough’ Environment
“It is more important than ever that the U.K. remains a competitive place to do business for both domestic and foreign banks,” BBA Chief Executive Officer Anthony Browne said in the report. Banks are continuing to contribute heavily to government coffers at a time when their revenue is under increasing pressure from a “tough economic environment and uncertainty,” he said.
The BBA says lenders now pay 5.5 percent of all government receipts and their contribution will rise again in 2016 once the effects of a new 8 percent surcharge tax on profits are seen. The lobby group has already called for the surcharge to be phased out ahead of Chancellor of the Exchequer Philip Hammond’s end-of-year fiscal statement this month.
PwC surveyed seven more banks this year than for the 2014-15 tax year, but the additional data did not affect the numbers, the BBA said by e-mail. Fourteen UK banks and 22 foreign lenders took part.
The bank levy was introduced in 2010 in response to public anger over bailouts and was subsequently increased eight times to boost government coffers.

Brexit Planning
Corporation tax receipts doubled to 3.2 billion pounds after the government restricted loss relief and altered the deductibility of compensation payments, the BBA said. The bulk of the remainder paid came from employment taxes and value-added tax.
Banks are already planning for a “hard Brexit” — an outcome in which they lose passporting — and may start relocating jobs once the formal Brexit process begins. A report from consultants Oliver Wyman on behalf of TheCityUK lobby group warned earlier this month that almost 70,000 jobs and 10 billion pounds of tax revenue are at risk from such an outcome.
Bank executives have said a transition period of as long as five years is necessary to renegotiate trade arrangements between the U.K. and the rest of the world.