Official Statistics

PAYE and corporate tax receipts from the banking sector (2023)

Published 5 October 2023

Coverage: United Kingdom

Theme: The Economy

Released: 5 October 2023

Next release: Autumn 2024

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 (PAYE) Income Tax and National Insurance contributions (NICs), Corporation Tax (CT), Bank Levy, Bank Surcharge and Bank Payroll Tax receipts from the banking sector.

2. Key messages

The key findings in this year’s publication are that:

• Chart 1 shows that total PAYE, CT, Bank Levy and Bank Surcharge receipts from the banking sector were £33.8 billion in financial year 2022 to 2023 which is an increase of £2.6 billion (8%) compared with the previous year and is mainly driven by continued economic recovery following the COVID-19 pandemic

• PAYE receipts from the banking sector were £22.9 billion in financial year 2022 to 2023, an increase of £1.0 billion (5%) compared with the previous year which is driven by earnings growth following the COVID-19 pandemic

• Corporation Tax receipts from the banking sector were £7.0 billion in financial year 2022 to 2023, an increase of £1.5 billion (28%) compared with the previous year which mostly reflects strong growth in financial company profits following the COVID-19 pandemic

• Bank Levy receipts were £1.3 billion in financial year 2022 to 2023, a decrease of £0.1 billion (9%) compared with the previous year which follows a change in the scope of Bank Levy in 2021 to apply to UK balance sheets only

• Bank Surcharge receipts were £2.6 billion in financial year 2022 to 2023, an increase of £0.2 billion (9%) compared with the previous year which reflects growth in banking sector profits following the Covid-19 pandemic

Chart 1: Receipts from the banking sector between the years 2005 to 2006 and 2022 to 2023, broken down by PAYE, Corporation Tax, Bank Levy, Bank Surcharge and Bank Payroll Tax

Chart 1 shows total receipts from the banking sector between financial years 2005 to 2006 and 2022 to 2023, with a breakdown by PAYE, Corporation Tax, Bank Levy, Bank Surcharge and Bank Payroll Tax. Total receipts have increased over this period from around £21 billion to around £34 billion. As shown in Chart 1 banking sector CT 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 CT receipts tend to change more than PAYE receipts.

The PAYE receipts data for financial years 2017 to 2018 onwards is based on improved identification of banks and 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 CT 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 definitions and background information, 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 financial years 2005 to 2006 to 2022 to 2023 on PAYE and CT receipts from the banking sector, alongside receipts of Bank Payroll Tax for financial year 2010 to 2011, Bank Levy from financial year 2011 to 2012 and Bank Surcharge from financial year 2016 to 2017. The period covered by these statistics 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 financial 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 is committed to providing 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. 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.

Key statistics to note include:

• there were small repayments of Bank Payroll Tax in financial years 2011 to 2012 and 2012 to 2013

• 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 for which employers themselves are directly liable

• 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 for financial years 2017 to 2018 onwards is based on improved identification of banks and data matching. This means the more recent PAYE data may not be directly comparable with earlier years

• 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

• 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 financial year 2011 to 2012

• 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 financial year 2015 to 2016

• 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 definitions and background information documentation

• there have been changes to tax rates over the period covered by these statistics. The main rates for the taxes in the table from financial years 2005 to 2006 to 2022 to 2023 are shown in Appendix B in the definitions and background information documentation

• receipts paid towards the end of financial year 2022 to 2023 will also reflect the increase in the main rate of Corporation Tax from 19% to 25% in April 2023

• figures may not appear to sum to the totals shown due to independent rounding to the nearest £0.1 billion

4.1 PAYE

Banking sector PAYE receipts were £22.9 billion in financial year 2022 to 2023, an increase of £1.0 billion (5%) compared with the previous year. The relevant Income Tax and National Insurance contributions rates and thresholds for the period covered by this bulletin are set out in Tables 2, 3 and 4 in Appendix B of the definitions and background information documentation. Receipts in financial year 2022 to 2023 will also be affected by National Insurance policy changes: the NICs rates increase, effective from April to October 2022, and the NICs Primary Threshold increase, effective from July 2022.

4.2 Corporation Tax

Corporation Tax receipts from the banking sector were £7.0 billion in financial year 2022 to 2023, an increase of £1.5 billion (28%) compared with the previous year. Receipts are presented gross of company tax credits. Further details of Corporation Tax rates are provided in Table 1 in the definitions and background information documentation.

4.3 Bank Levy

Bank Levy was introduced in January 2011 with the first payments received in July 2011. Receipts increased from financial year 2012 to 2013 until 2015 to 2016 mainly due to increases in the Bank Levy rate. Since then Bank Levy receipts have decreased each year as tax rates have fallen. In addition, from 2021, the Bank Levy has been 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. Bank Levy rates are provided in Table 5 in the definitions and background information documentation.

4.4 Bank Surcharge

Bank Surcharge was introduced in January 2016, with payments becoming due for the first time in financial year 2015 to 2016. However, payments received between 1 January 2016 and 31 March 2016 were very small and have been assigned to financial year 2016 to 2017 in HMRC’s tax receipts statistics to avoid disclosure. Bank Surcharge receipts in financial year 2022 to 2023 were £2.6 billion, an increase of £0.2 billion (9%) on the previous year. Receipts paid towards the end of financial year 2022 to 2023 will also reflect the decrease in the Bank Surcharge rate from 8% to 3% in April 2023. Bank surcharge rates are provided in Table 6 in the definitions and background information documentation.

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. These are available on the Statistics at HMRC page of GOV.UK.