London Bankers Cite 46.2% Tax Rate, Omitting Paris From Global Comparison

Bankers in London face a potentially higher tax bill if the UK government acts on proposals to increase levies, a move that could affect shareholder returns and executive compensation. The debate centers on a new report from the banking lobby group UK Finance, which argues that the capital already carries the heaviest tax load among major financial hubs.

UK Finance, representing institutions including Lloyds, JP Morgan, and Revolut, released the data to lobby Chancellor John Healey ahead of next week's budget. The report, prepared by PwC, calculates the total tax burden on a standardized large bank. It includes corporation tax, social security, VAT, and specific bank levies. The figures place London at a total rate of 46.2 percent.

This rate exceeds those in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. The group warns that increasing taxes could prompt banks to shift business and jobs to these rival centers. The letter sent to the Chancellor emphasized these comparative figures to support its case against new levies.

Critics point out that Paris, a major competitor hosting firms like Goldman Sachs and Barclays, is absent from the comparison. Independent calculations reviewed by an accountancy firm estimate that a bank in Paris would face a total tax rate between 51.6 percent and 57.3 percent. This range is up to 11.1 percentage points higher than the rate in London.

UK Finance said it considered including Paris but could not generate a comparable figure using its specific model bank. The group argued that limiting the data to five cities ensures consistent tracking over time. It noted that in previous years, jurisdictions like Frankfurt showed higher total tax rates than the UK.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He stated that the data does not reflect the actual taxes paid by Britain's big banks, which he believes are likely lower than those of competitors. The TUC has proposed increasing the bank surcharge from 3 percent to 8 percent, a change that could raise 2.25 billion pounds per year.

Simon Youel, head of policy at Positive Money, questioned the methodology, asking if Paris was left out to bolster the claim that the City contributes more tax than any other global sector. Youel suggested the Chancellor should follow other countries in raising bank taxes to recoup windfall profits from higher interest rates.

Reactions from banking leaders vary. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise would be bearable and supported the Chancellor. 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 discuss the risks of further levies. A Treasury spokesperson said tax decisions are for the Chancellor to set out at fiscal events. PwC has been contacted for comment on the report's methodology.