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Eversheds comment: Continued targeting of UK banking sector on taxation may prove counterproductive

  • United Kingdom

    21-09-2015

    Commenting on today's BBA report into the risk posed to jobs and growth in the UK banking sector by complex taxation levies, Ben Jones, partner and tax expert at law firm Eversheds, says:

    “The banks have proved an easy and politically popular target for increased taxation in the wake of the financial crash, and it is not surprising that initially temporary measures have since become enshrined in the tax system. The bank levy alone has raised over £8bn since its introduction and is anticipated to continue to generate £4bn each year – not amounts that are easy for the Treasury to replace from elsewhere.

    "However, as the BBA report indicates, continued targeting and the perceived permanent change to the tax treatment of the banking sector may eventually be counterproductive. The changes announced to the bank levy this summer and the planned introduction of the bank corporation tax surcharge were designed to meet concerns that certain larger banks may relocate away from the UK’s current aggressive bank taxation environment, but smaller banks are likely to continue to suffer. When considering future investment and growth, such banks will need to consider whether jurisdictions other than the UK, with less punitive bank taxation regimes, might offer better opportunities.”

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