London banks skip Paris in tax report

UK Finance, the trade body representing major lenders including Lloyds, JP Morgan, and Revolut, has launched a campaign to prevent a tax hike in the upcoming budget. The group asserts that London currently imposes the heaviest tax burden on banks of any major financial center. This claim relies on a report stating that the total tax rate for large banks in the UK is 46.2 percent.

The calculation comes from an annual report compiled by the accountancy firm PwC. The methodology aggregates corporation tax, social security contributions, value-added tax, and specific banking levies. UK Finance sent a letter to Chancellor John Healey citing these figures. The group warns that higher rates could drive banks to shift operations and employment to competing hubs.

The report ranks London above Amsterdam, which has a 42.2 percent rate, and Frankfurt at 39.1 percent. Dublin and New York follow with rates of 29 percent and 27.9 percent, respectively. The document has been used by the industry to build a case for maintaining the current fiscal framework.

Critics argue the comparison is flawed because it excludes Paris. The French capital is a primary competitor to London and hosts offices for major institutions such as Goldman Sachs and Barclays. Independent estimates reviewed by an accounting firm place the total tax burden in Paris between 51.6 percent and 57.3 percent. This range is up to 11.1 percentage points higher than the London rate cited in the industry report.

UK Finance defended its choice of cities. The group stated that it could not produce a consistent, like-for-like figure for Paris using its standard model bank. It maintained that retaining the same five jurisdictions allows for stable year-on-year comparisons. The association also pointed out that in previous years, cities like Frankfurt recorded higher tax totals than the UK.

Labor unions and campaign groups have challenged the methodology. Paul Nowak, general secretary of the Trades Union Congress, called the effort a misleading attempt to avoid fair taxation. He argued that the data does not reflect the actual amounts paid by British banks, which he believes are lower than those of foreign rivals. The TUC proposes raising the bank surcharge from 3 percent to 8 percent, a move it estimates would generate 2.25 billion pounds annually.

Simon Youel of Positive Money questioned whether Paris was intentionally left out to support the narrative that the City pays more than other sectors. He expressed hope that the Chancellor would follow other nations in increasing bank taxes to recover profits driven by high interest rates.

Industry leaders offer divided views on the fiscal pressure. CS Venkatakrishnan, chief executive of Barclays, told reporters on Thursday that the sector can absorb a tax rise and backed the Chancellor's position. Jamie Dimon of JP Morgan previously warned that hostile policies could force the bank to abandon its planned 3 billion pound London headquarters. Dimon met with Healey last month to discuss the risks of new levies on investment and jobs. A Treasury spokesperson said tax decisions rest with the Chancellor at fiscal events, while PwC has been contacted for comment on its methodology.