UK Finance letter cites 46.2% London tax rate while excluding Paris from PwC data

UK Finance, which represents major lenders including Lloyds, JP Morgan, and Revolut, sent a letter to Chancellor John Healey arguing that London imposes the heaviest tax burden on global banks. The group relies on an annual report by PwC to support its case against raising taxes in next week's budget. The lobby warns that higher levies could force institutions to relocate business and jobs to rival financial centers.

The PwC report calculates total tax exposure for a large bank, incorporating corporation tax, social security, VAT, and bank levies. It places London's total rate at 46.2 percent. This figure exceeds rates in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. UK Finance used these specific comparisons to highlight London's position relative to other major hubs.

Paris, a key competitor hosting institutions like Goldman Sachs and Barclays, is absent from the list. Independent calculations reviewed by a leading accountancy firm estimate that a bank in Paris faces a total tax rate between 51.6 percent and 57.3 percent. That range is up to 11.1 percentage points higher than the rate applied to London. UK Finance stated it could not generate a like-for-like figure for Paris using its specific model bank. The group maintained that keeping the same five cities allows for consistent comparison over time.

Critics argue the omission distorts the competitive picture. Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He stated that the data does not reflect actual taxes paid by British banks, which he believes are lower than those of many competitors. Simon Youel, head of policy and advocacy at Positive Money, questioned whether Paris was left out to allow UK Finance to claim the City contributes more tax than any other global financial sector.

The TUC has proposed increasing the bank surcharge from 3 percent to 8 percent. Nowak said this change could raise 2.25 billion pounds per year. He added that the Chancellor has a responsibility to ask those benefiting from windfall profits to pay a fairer share, particularly as millions struggle to make ends meet while banks pay out billions to shareholders and executives.

Banking leaders have offered mixed reactions to the potential tax hike. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact would be bearable. He gave the Chancellor his full support. Jamie Dimon, head of JP Morgan, warned in May that the bank could scrap plans for a new 3 billion pound London headquarters if Britain became hostile to banks. Dimon met with Andy Burnham and Healey last month to warn that further levies could put investment and jobs at risk.

A Treasury spokesperson said decisions on tax are for the Chancellor to set out at fiscal events. The department noted that it does not routinely comment on rumors, speculation, or proposals. PwC has been contacted for comment regarding the methodology used in the report.