UK's financial firms are calling on the chancellor Rishi Sunak to abolish the bank surcharge and bring the effective tax rate that banks pay in the UK closer to that paid by competitors in the US, Germany and the Netherlands.
TheCityUK, an industry-led body representing UK-based financial and related professional services, wants Sunak to use 2021 Budget and Spending Review to make the UK more competitive and help return the country to being the world’s leading international financial centre over the next five years.
Sunak had announced that he would review the 8% surcharge in his budget speech in March. "We will review the surcharge, to make sure the combined rate of tax on the United Kingdom banking sector doesn’t increase significantly from its current level and to make sure this important industry remains internationally competitive," the chancellor had said.
TheCityUK also wants the government to ensure that insurance premium tax does not rise as it "drives up the costs of necessary forms of protection, disproportionately affecting the least well off," and to make a strategic tax plan to focus on improving the UK’s tax competitiveness to help bring "certainty and stability" and tighten the scope of tax rules.
The lobby group is calling for the government to re-focus economic diplomacy onto strengthening regulatory engagement with priority countries, building new trade and investment ties, and supporting international development, in order to "advance global Britain."
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The chancellor should also move to support the UK’s judiciary and courts system and commit to a long-term investment in both technology and courts structures and processes to respond to the challenges set by competitor jurisdictions, it said.
The government should lead the transition to net zero carbon emissions by identifying and developing incentive structures that can help promote sustainable investments and commit to long-term support for those transitioning to electric vehicles, the group said.
It recommended an exemption from vehicle excise duty and separate rates of business-in-kind rates for employees who drive electric vehicles as a way to drive the UK towards net zero.
The budget should also support the delivery of the government's Plan for Growth, the group said, including supporting small businesses post-pandemic and ensuring that educational investment is aligned with the skills needs of businesses and accessible across the UK.
Miles Celic, CEO of TheCityUK, said: "The future of the UK’s status as a world-leading international financial centre rests on a vision based on openness, competitiveness and connectivity.
"There must be continued investment across the country, the deployment of world-leading technology must continue, and our expertise in key future markets such as green finance enhanced.
"Achieving these goals will need closer working between government, industry, and regulators. This Budget and Spending Review is the perfect opportunity to strengthen this partnership."