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London bankers semi-ok with £42k each in tax

Fewer people work in banking and financial services in the UK than in the past, and the survivors are paying more per head in tax. 

So says the latest report from UK Finance, the banking lobbying body. In the most recent tax year, UK Finance calculates that the average employee in the UK banking sector paid £42.4k ($53k) in employment taxes, up from £36.3k the previous year. Over the same period, employment in the industry fell 3.2%.

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The report defines employment taxes as income tax and employers' national insurance, so not all the £42k is coming from employees' pockets directly. Most of it is, though. And given that the analysis includes all bank employees in the UK and not just those in the City of London, London bankers will be paying far more. The report notes that contributions are highest at non-UK banks.

Tax payments have risen due to fiscal drag as tax thresholds have failed to keep pace with inflation, and as national insurance payments were briefly hiked last year. 

As we've written here before, many junior bankers in London complain bitterly about high tax rates as they breach the £100k earnings threshold and have their tax-free allowance removed on marginal income. When student loan repayments are added in, the resulting marginal tax rate can be as high as 72%. 

Some junior bankers in London complain of being hit with additional tax payments at the end of the year once bonuses are taken into consideration. "It's difficult when you suddenly have to pay an extra £4-£5k," says one. 

However, they are also sanguine about their tax payments. "We are high income people," says one associate. "Most people in banking have no idea how difficult it is for people on benefits."

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Photo by Colin Watts on Unsplash

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AUTHORSarah Butcher Global Editor

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