British Finance Sector Urges Tax Reform Amid Global Competition

The UK's finance industry is urging the new Labour government to phase out additional bank taxes, arguing that London's tax burden surpasses that of global rivals. It warns that heightened taxes could hamper competitiveness, while calling for reforms like abolishing the stamp duty on UK share purchases.

The finance industry in Britain is urging the new Labour government to gradually eliminate additional taxes on banks, warning that London's lenders face a heavier tax burden compared to those in competing cities like New York and Frankfurt. UK Finance, a bank trade group, has made this request in advance of Labour's first budget statement, scheduled for October 30.

Amidst soaring profits from increased interest rates, banks in Britain have intensified their lobbying efforts against potential tax increases. Insiders mention concerns that finance minister Rachel Reeves might target the banking sector to bolster public finances. The previous Conservative administration had reduced a surcharge on bank corporation tax, but the lobbying body is pushing for its complete abolition.

UK Finance emphasized the importance of publishing a comprehensive business taxation roadmap, specifically to phase out the bank surcharge and levy over time. Additionally, the group reiterated its recommendation to scrap a 0.5% stamp duty on UK share purchases to boost investment. The Investment Association also advocated for the removal of this duty, though some analysts argue that other factors, such as declining defined benefit pension schemes, have a more significant impact on share demand.

(With inputs from agencies.)