Credit turmoil slashes £2.5bn off banks corp tax
The losses suffered by Britain’s biggest banks as a result of the global credit turmoil will slash £2.5bn from public finances
Writedowns reported in recent weeks by the
Royal Bank of Scotland, HBOS
and Lloyds TSB are estimated to cut more than £2.5bn off the three banks’
combined tax bills, most of which is expected to come at the expense of British
taxpayers.
Based on estimates compiled by the Financial Times, the figure
represents more than 5% of the HM Treasury’s forecast for corporation tax
receipts in the 2007-08 financial year and highlights the dependence of the
public finances on the banking industry, which has accounted for a growing share
of the tax base in recent years.
In 2005-06, the most recent year for which a breakdown is available, the
banking, finance and insurance sectors paid corporation tax of £11.6bn – about a
quarter of the total.
The damage suffered by UK banks from market turmoil will be highlighted this
week when two of Britain’s biggest banks, HSBC and
Barclays,
deliver their first quarter results and Barclays as expected announces
writedowns of £1.4bn before tax.
Further reading:
Mortgage giant braces itself for bumper write down
Read
the Financial Times story