One of the ways that our commitment to Helping Britain Prosper can be measured is through our contribution to UK tax revenues. We are proud to be one of the largest contributors to UK tax revenues.
We were the second highest payer of UK taxes in the most recent PwC Total Tax Contribution Survey of the 100 Group, which measured the UK tax contribution of most of the UK’s largest businesses for the year 2014 (in 2013 we were the highest payer).
In 2013 and 2014 we paid roughly £1.7bn in taxes. In 2015 we paid £1.8bn. In addition we also collected £2.2bn tax for the Government in 2015.
We recognise that as one of the largest contributors to UK tax revenues it is important we clearly explain our approach to tax.
The Group’s approach is governed by a Group Board-approved Tax Policy and strategy which we have discussed with HMRC. We ensure our Tax Policy, and the procedures and controls which underpin our approach, are appropriate and implemented in full.
We seek to ensure that all taxes are correctly accounted for and that all tax returns are completed accurately and on time. We do not interpret tax laws in a way that we believe is contrary to their intention, and we do not promote tax avoidance products to our customers. We comply with the HMRC Code of Practice on Taxation for Banks and the Confederation of British Industry’s Statement of tax principles. We have an open, co–operative, and transparent relationship with HMRC.
The tax system covering our activities is complex and wide ranging. As a result any decisions we take regarding tax are based on a considered assessment of long term costs and risks including their impact on relationship with stakeholders and our reputation with our customers.
We liaise closely with HMRC to ensure they are aware of all significant transactions in the Group and that their view of those transactions is understood. As with any large group, we may occasionally have a different view to HMRC. These differences of opinion are discussed with the intention of resolving them in a transparent, honest and professional manner
Tax payments in 2015
UK Corporation Tax
Whilst being one of the highest payers of UK tax, we have not paid corporation tax in recent years. This is due to the automatic offset under UK tax rules of prior year tax losses which arose from the banking business during the financial crisis. In 2015 changes to the UK tax rules for Banks, including a limit on the amount of tax losses which can be offset against profits, meant that we paid £165m of corporation tax.
The Group expects to continue to pay significant amounts of corporation tax in 2016 and future years.
Where we pay tax
We are a UK focussed retail and commercial bank. We have exited from 21 countries in recent years and now have very limited overseas activities. These are predominately carried on through a small number of overseas branches of our UK banks. The profits of our overseas branches are subject to tax in the UK as these are included in the results of the UK banks with credit for overseas taxes paid. The profits of overseas entities total less than £100m and this amount is expected to fall as we continue to exit from overseas locations. Where we maintain operations in low tax jurisdictions through subsidiaries under UK tax rules we pay full UK tax on profits arising in those entities unless limited specific exemptions apply.
Tax we collect
In addition to our own obligations as a tax payer we also collect tax on behalf of the UK Government. In 2015 we collected £2.2bn. This is likely to fall as from 5 April 2016 we will be no longer required to deduct tax from most interest payments.