From 2010-2020 banks will have faced an additional £4 billion a year in taxes on top of taxes that they already pay such as Corporation Tax, employment taxes, irrecoverable VAT and business rates.
The Summer Budget introduced a further additional tax that is only payable by banks – an extra 8% Bank Corporation Tax Surcharge. This was the fifth new bank-specific tax measure introduced in as many years. While the Chancellor also announced a series of reductions in the Bank Levy over the next six years, the Summer Budget will still add a further £1.7 billion of tax to the banking sector over the same period, according to the BBA. The Bank Levy was paid by 30 banks but the new tax will be levied on hundreds of banks and building societies.
Commenting, BBA Chief Executive Anthony Browne said:
“Banks expect to pay their fair share of tax. But they are concerned that they are being singled out for new punitive taxes every year. This makes it harder for banks – the UK’s biggest export industry – to lend to businesses and create new jobs.
“The new Bank Corporation Tax Surcharge will undermine competition by creating an additional new tax for lots of smaller banks.
“While it is good that the Government wants to amend the Bank Levy so that it no longer penalises global UK banks these changes will not come into force until 2021 under the next government. This has led some to question whether they can believe that this reform will ever actually come into force. Banking is one of the most globally mobile businesses, that is why we would like the UK Government to hold a strategic review of bank taxation to ensure we remain competitive.”
