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26 October 2017

Financial Times: Brexit to test £17bn tax haul on foreign banks

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Foreign banks contributed £17bn to the UK’s public finances in the latest financial year, raising concerns about potentially significant tax losses if overseas lenders accelerate plans to shift staff and operations elsewhere in Europe.

Overall, the banking sector, including British lenders, contributed £35bn to UK finances in the year to the end of March, a slight rise on the £34bn contributed in the previous year, according to PwC, the professional services firm.

The figures, which include corporation tax, value added tax and national insurance contributions paid by banks, as well as stamp duty, income tax and VAT paid by employees, will add to fears about the economic impact of Britain leaving the EU if its position as Europe’s biggest financial centre is weakened.

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, the professional body for the accounting industry, said: “It is inevitable that there will be a decline in banking sector tax contributions as some operations are shifted out of the UK to protect against Brexit. The figures we have today could be called ‘peak tax’ until the dust settles and [banks know] how much of their operations they can [move] out of the UK.”

Foreign banks have stepped up their efforts to Brexit-proof their businesses by arranging to move activities or staff overseas long before negotiations between the UK and the European Commission near completion. [...]

Full article on Financial Times (subscription required)

© Financial Times

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