THE UK’S LARGEST BANKS paid an effective tax rate of 71.3% of their profits to HM Revenue & Customs in 2013, according to research conducted by KPMG.
KPMG’s study examined several key metrics in the published results of the top five UK banking groups since 2011 to assess the impact of the UK bank levy since its introduction.
The results showed 58% of the banks’ combined profits go toward levies such as corporation tax and overseas taxes, with 13% going on the bank levy.
Continued hikes to the bank levy drain lenders of funds which could be used for capital buffers and increased lending, the report said.
Bank levy rates remain unchanged following the chancellor’s 2014 Budget last week, but a further consultation on the design of the levy, to be launched this week, was announced by the government.
The levy was initially intended to discourage reliance on risky wholesale funding, but it has risen twice a year since its introduction in order to ensure the charge generates £2.5bn annually.
KPMG’s UK head of banking Tom Aston said: “The bank levy was introduced, in part, to support the key policy objective of reducing risk in the banking sector following the financial crisis. Our research demonstrates that, on some of the key measures, overall risk in the UK banking sector has now decreased with many banks having made substantial reductions in the size of their balance sheets as well as holding increased levels of capital to meet the new regulatory requirements.”
Research also finds that 84% of businesses believe that the government has not provided enough information about digital tax plans
A total of £16bn was lost through tax fraud last year, according to estimates released by Pinsent Masons
Additional tax a result of compliance investigations by HMRC, but overall revenue falls
Firm expands East Anglian team with appointments to the audit practice and private client tax team