Official Statistics

PAYE and Corporate Tax receipts from the banking sector (2022)

Published 22 September 2022

Coverage: United Kingdom

Theme: The Economy

Released: 22 September 2022

Next release: Autumn 2023

Frequency of release: Annual

Statistical contacts:

J. Hickie (PAYE): personaltax.statistics@hmrc.gov.uk

D. Pritchard (Corporation Tax, Bank Levy and Bank Surcharge): ct.statistics@hmrc.gov.uk

1. About these statistics

This is an official statistics publication produced by HM Revenue and Customs (HMRC). It provides statistics on Pay-As-You-Earn Income Tax and National Insurance contributions (PAYE), Corporation Tax, Bank Levy, Bank Surcharge and Bank Payroll Tax receipts from the banking sector.

2. Key Messages

The main messages from the publication are:

• Chart 1 shows that total PAYE, Corporation Tax, Bank Levy and Bank Surcharge receipts from the banking sector were £31.2 billion in the tax year 2021 to 2022. This is an increase of £2.6 billion (9.1%) compared with the previous tax year, mostly driven by the economic recovery following the COVID-19 pandemic

• PAYE receipts from the banking sector were £21.9 billion in the tax year 2021 to 2022, an increase of £1.1 billion (5.3%) compared with the previous tax year. This increase is mostly driven by the economic recovery following the COVID-19 pandemic

• Corporation Tax receipts from the banking sector were £5.5 billion in the tax year 2021 to 2022, an increase of £1.4 billion (34%) compared with the previous tax year. This reflects the economy and financial company profits recovering from the COVID-19 pandemic

• Bank Levy receipts were £1.5 billion in the tax year 2021 to 2022, a £0.8 billion (34%) decrease compared with the tax year 2020 to 2021. This was mainly driven by a change in the scope of Bank Levy in 2021 to apply to UK balance sheets only

• Bank Surcharge receipts were £2.4 billion in the tax year 2021 to 2022, a £0.9 billion (66%) increase compared with the tax year 2020 to 2021. This reflects strong recovery in banking sector profits following the Covid-19 pandemic

Chart 1 shows the total receipts from the banking sector between the tax year 2005 to 2006 and the tax year 2021 to 2022, with a breakdown by PAYE, Corporation Tax, Bank Levy, Bank Surcharge and Bank Payroll Tax. The total receipts have increased over this period from around £21 billion to around £31 billion.

The PAYE receipts data has been revised from tax year 2017 to 2018 onwards since the last publication due to improvements to the identification of banks and improved data matching. This means the more recent PAYE data may not be directly comparable with earlier years.

3. Introduction

3.1 What does this publication tell me?

This publication provides outturn statistics for PAYE and Corporation Tax receipts from the banking sector in the UK, alongside receipts from the Bank Payroll Tax, Bank Levy and Bank Surcharge. Not all tax receipts from the banking sector are included in these statistics, in particular irrecoverable VAT and Insurance Premium Tax (IPT).

The reasons for this are discussed in the background information of this publication, which also includes estimates of receipts from these taxes from the banking sector.

3.2 Who might be interested in these statistics?

This publication is likely to be of interest to policy makers in government, academics, research organisations, the media and the UK banking and financial sectors. It will be of particular interest to those who want to know the PAYE and corporate tax contribution of the banking sector, including its employees.

3.3 What does the receipts table show?

This presents annual figures for the tax year 2005 to 2006 to the tax year 2021 to 2022 on PAYE and Corporation Tax receipts from the banking sector, alongside receipts of Bank Payroll Tax from tax year 2010 to 2011, the Bank Levy from tax year 2011 to 2012 and the Bank Surcharge from tax year 2016 to 2017.

The period covered by these statistics (the tax year 2005 to 2006 to the tax year 2021 to 2022) was chosen to give a reasonable coverage both before and after the financial crisis. Due to the changing and complex structure of the banking sector it is impractical to extend the statistics to periods earlier than tax year 2005 to 2006.

3.4 Taxpayer confidentiality

HMRC has a legal duty to maintain the confidentiality of taxpayer information and disclosing information to persons outside of HMRC is only allowed in a limited number of circumstances. These are set out in Section 18 of the Commissioners of Revenue and Customs Act 2005.

The statistics in this release are presented at an aggregate level so that no individual bank’s tax payments can be identified or inferred.

3.5 User engagement

HMRC provides impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our official statistics and identify gaps in the statistics that we produce.

If you have any comments or questions about these statistics, then please contact the responsible statisticians directly.

4. Section 2: Receipts commentary

The table which accompanies this release as a separate document shows Pay-As-You-Earn, Bank Payroll Tax, Corporation Tax, Bank Levy and Bank Surcharge receipts from the banking sector. The following notes assist in interpreting the table.

Table notes:

1. There were small repayments of Bank Payroll Tax in the tax year 2011 to 2012.

2. Corporation Tax, Bank Levy and Bank Surcharge liabilities fall to companies to pay from their own resources. Sums paid through PAYE include a) Income Tax and National Insurance that employers deduct from employees’ earnings and pensions and pay to HMRC on employees’ behalf, and b) the separate National Insurance contributions (NICs) for which employers themselves are directly liable.

3. Annual PAYE receipts relate to cash receipts between 1 May and the following 30 April. Annual Corporation Tax receipts relate to cash receipts, gross of company tax credits, between 1 April and the following 31 March. The PAYE receipts data has been revised from tax year ending March 2018 onwards since the last publication due to improvements to the identification of banks and improved data matching. This means the more recent PAYE data may not be directly comparable with earlier years.

4. The gross receipts figure is shown in the table for the (temporary) Bank Payroll Tax. HMRC has estimated that the net yield, taking account of behavioural effects which may have affected other tax receipts, was £2.3 billion. Cash receipts from the Bank Payroll Tax relate to the period 9 December 2009 to 5 April 2010.

5. Annual Bank Levy receipts relate to cash receipts, net of repayments, between 1 April and the following 31 March. The Bank Levy was introduced from 1 January 2011, with payments becoming due for the first time in the tax year ending March 2012.

6. Annual Bank Surcharge receipts relate to cash receipts, net of repayments, between 1 April and the following 31 March. The Bank Surcharge was introduced from 1 January 2016, with payments becoming due for the first time in the tax year ending March 2016.

7. Receipts of Insurance Premium Tax and of irrecoverable VAT paid by the banking sector are not included in this table. Further details on these taxes can be found in the background information of this publication.

8. There have been changes to tax rates over the period covered by these statistics. The main rates for the taxes in the table from the tax year 2005 to 2006 to the tax year 2021 to 2022 shown in Appendix B of the background information of this publication.

9. Figures may not appear to sum to the totals shown due to rounding to the nearest £0.1 billion.

As shown in Chart 1 banking sector Corporation Tax receipts have varied proportionately more than PAYE receipts over the period. Company profits are generally more sensitive to the economic cycle than pay and employment levels, so Corporation Tax receipts tend to change more than PAYE receipts.

4.1 PAYE

Banking sector PAYE receipts were £21.9 billion in the tax year 2021 to 2022, an increase of £1.1 billion compared with the tax year ending 2020 to 2021. The relevant Income Tax and NICs rates for the period covered by this bulletin are set out in Tables 2, 3 and 4 in Appendix B of the background information of this publication.

4.2 Corporation Tax

Corporation Tax receipts from the banking sector were £5.5 billion in the tax year 2021 to 2022, an increase of £1.4 billion compared with the tax year 2020 to 2021. Receipts are presented gross of company tax credits. In recent years receipts have been lower compared with the period between the tax year 2005 to 2006 to the tax year 2007 to 2008 prior to the financial crisis. The financial crisis resulted in lower profits in the banking sector, reducing Corporation Tax liabilities.

A further contributing factor has been reductions in Corporation Tax rates. The main rate was 30% until the tax year 2008 to 2009 and has been cut over several years to 19% in the tax year 2017 to 2018. Further details are provided in Table 1 in the background information of this publication.

4.3 Bank Levy

Bank Levy was introduced in January 2011 with the first payments received in July 2011. Receipts increased from the tax year 2012 to 2013 to the tax year 2015 to 2016 mainly due to increases in the Bank Levy rate. Bank Levy receipts decreased from £2.3 billion in the tax year 2020 to 2021 to £1.5 billion in the tax year 2021 to 2022.

From 2021, the Bank Levy is chargeable only on the UK balance sheet equity and liabilities of banks and building societies. Broadly, this means that overseas activities of UK headquartered banking groups are no longer subject to the Bank Levy. Further details are provided in Table 5 in the background information of this publication.

4.4 Bank Surcharge

Bank Surcharge was introduced in January 2016, with payments becoming due for the first time in the tax year 2015 to 2016. However, payments received between 1 January 2016 and 31 March 2016 were very small and have been assigned to the tax year 2016 to 2017 in HMRC’s tax receipts statistics to avoid disclosure.

This is because companies who are liable to pay the Bank Surcharge pay their Corporation Tax in quarterly instalments. Most banking businesses have calendar year accounting periods and were not due to pay the first instalment for their 2016 liabilities until July 2016.

Bank Surcharge receipts in the tax year 2021 to 2022 were £2.4 billion, an increase of £0.9 billion on the previous year. Bank surcharge rates are provided in Table 6 in the background information of this publication.

4.5 Bank Payroll Tax

The Bank Payroll Tax was a temporary tax on awards of discretionary bonuses to banking employees, which applied from 9 December 2009 until 5 April 2010. The gross receipts figure is shown in Chart 1 and the accompanying table. This figure is shown gross, without taking account of behavioural effects which may have reduced receipts of other taxes. HMRC has estimated that the net yield, taking account of behavioural effects which may have affected other tax receipts was £2.3 billion.

HMRC produces statistics showing tax receipts from the economy as a whole, as well as publications on receipts from specific taxes and duties.