UK banks taxed almost double the amount of the rest of the FTSE 100

UK banks pay nearly double the amount of tax compared to the rest of the FTSE 100, new data has revealed.

The five biggest banks paid an effective tax rate – the rate at which a corporation’s profits are taxed – of 42 per cent last year, almost twice as much as the 23 per cent paid by the FTSE 100 as a whole, according to Thomson Reuters.

The high rate is partly due to the bank levy that was introduced in 2011 in response to the financial crisis, which added an eight per cent corporation tax surcharge on bank profits over £25m.

Thomson Reuters Customer Markets chief operating officer Brian Peccarelli said: “The huge difference in effective tax rates not only between sectors but also between companies in the same sectors highlights how critical paying the right amount of tax can be,

“Looking ahead, the Trump tax reforms and Brexit suggest that corporation tax rates could become a large area of competition between countries to attract corporates.

“As a result, we may see businesses more focused on the effective tax rate which in turn may sway relocation decisions.”

Utility companies paid an average effective tax rate of 15 per cent and property companies paid just 0.6 per cent due to their tax efficient real estate investment trust structures.