United Kingdom: Payroll tax receipts from UK banks rise above pre-crisis levels
03 September 2013
Posted by: Author: Vanessa Houlder
Author: Vanessa Houlder
Payroll tax receipts from the banking sector edged up by 1.5 per cent to £17.8bn in the year to April, significantly exceeding the amounts paid before the banking crisis, according to new official data.
Corporate tax paid by banks, on the other hand, has fallen by roughly two-thirds since the crisis, although the £2.3bn take in 2012-13 does constitute a £900m rise from a low in 2011-12, the Office for National Statistics said.
Overall, the tax paid by the sector, including corporation tax, pay-as-you-earn and the bank levy, increased by 6 per cent to £21.7bn in 2012-13. That is about £1.6bn less than the total take before the 2008 banking crisis and about £2.7bn less than the 2010-11 figure, which was boosted by the bank payroll tax.
The banking industry’s share of total corporation tax receipts has fallen from about 20 per cent in 2005-06 to 6.4 per cent in 2012-13. This is because of lower profitability and a fall in the corporation tax rate, as well as the impact of losses carried forward.
The bank levy, a tax based on chargeable equity and liabilities arising from banks’ balance sheets that was introduced from 1 January 2011, generated £1.6bn in both 2012-13 and 2011-12.
The payroll tax take from the sector has been affected by significant policy changes including the introduction of the 50p rate on top earners, reduced to 45p since April, new pension and anti-avoidance restrictions and the bank payroll tax, a temporary 50 per cent rate for discretionary bonuses over £25,000 imposed between December 2009 and 5 April 2010.
The banking sector share of total payroll taxes paid by the economy has been relatively stable since 2005-06. The sector’s share was 7.7 per cent in 2012-13 and has ranged from 6.3 per cent in 2008-09 to a peak of 7.8 per cent in 2010-11.
The payroll taxes counted by the ONS include the income tax and national insurance that employers deduct from wages and pensions and pay to HMRC on employees’ behalf and the separate national insurance contributions for which employers are directly liable.