The total tax rate levied on British banks has risen again this year, according to a report by an industry trade body that will underpin warnings about threats to the City’s international competitiveness ahead of next month’s budget.
Sky News has learnt that a study by UK Finance will show that the disparity between the tax rate paid by London-based banks – with a total tax rate of 46.4% – and those in rival financial centres such as Amsterdam, Frankfurt and New York has also widened this year.
UK Finance’s report will be made public on Wednesday, weeks before Rachel Reeves, the chancellor, delivers a budget which speculation suggests will include additional bank-specific taxes as she seeks to plug a fiscal gap estimated at up to £30bn.
According to the trade association’s document, the total tax rate applied to London-based banks this year is almost precisely two-thirds higher than that applied to their New York-based peers, whose equivalent figure was 27.9%.
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The UK figure of 46.4% was 0.6 percentage points higher than in 2024, largely because of the increase in employers’ national insurance contributions, which came into effect in April, the report will say.
It projects a further increase in the UK figure in 2026 to 46.6% – with the trend likely to exacerbate concerns that London is losing ground to its major international competitors.
In total, the UK banking industry paid £43.3bn in tax to the exchequer in the year to the end of March 2025, according to an estimate in the report.
That figure is nearly one-third higher than the contribution of £33.4bn in 2014, the first year for which comparable figures were compiled.
