UK banks push for tax and regulatory reforms to spur stagnant growth
The UK banking sector contributed £43.3 billion in taxes last year, accounting for 4.3 per cent of the country’s total tax receipts. Now, industry leaders are pushing for changes to boost growth and improve competitiveness after years of slow progress. UK Finance, which represents around 300 banking and financial firms, has released a nine-point plan to strengthen the sector. The group argues that a competitive tax system must go hand in hand with a growth-focused regulatory approach.
David Postings, the organisation’s chief executive, claimed that tighter regulations and excessive risk aversion have stifled the industry’s expansion over the past two decades. He suggested that even a slight shift in regulators’ willingness to take calculated risks could unlock significant growth. UK banks currently face an extra surcharge on top of standard business taxes, pushing their total tax rate to 28 per cent. In London, the rate reaches 46.4 per cent—higher than in Amsterdam, Frankfurt, Dublin, and New York. UK Finance has urged the government to avoid further sector-specific tax hikes to keep the UK an attractive destination for investment. The plan also calls for clearer sequencing of reforms, stronger accountability from regulators, and better cooperation between government, industry, and watchdogs. Last year, Labour’s Angela Rayner proposed raising the surcharge to five per cent as an alternative to welfare cuts.
The banking sector’s tax burden remains substantial, with London’s rate standing out as one of the highest globally. UK Finance’s proposals aim to create a more stable and growth-friendly environment, but any changes will depend on government and regulatory responses in the coming months.
