Bank bonus cap removed, but surcharge to remain unchanged

Richard Milnes, UK Banking Partner at EY, comments:

“It is positive that UK financial services is being held up as a key driver of economic growth, and that the Chancellor is actively championing London as the major global financial hub it is. Today’s headline news to remove the bonus cap for bankers sends a strong signal that the UK is a competitive global market to work or operate in. However, underneath this, the announcement that the bank surcharge will remain at 8% – and not drop to 3% in April 2023 – means the overall tax receipts from the biggest banks change little and remain significantly higher than for all other business. The effective corporation tax rate for the UK banking sector will be 27%, which while a percentage point lower than had previously been announced, is markedly above the 19% rate other sectors will benefit from.”