This figure represents a £2.2bn increase from the previous year and accounts for 4.6% of total UK government tax receipts. The sector’s tax contributions were split between £22.1bn in taxes borne, such as corporation tax and the bank levy, and £18.9bn in taxes collected, including income tax and national insurance from employees.

Employment taxes from the sector amounted to £22.9bn. Internationally, London’s total tax rate for corporate and investment banks stands at 45.5%, higher than both New York’s and Dublin’s, but slightly lower than Frankfurt’s and Amsterdam’s. However, this rate is expected to climb even further in 2024 as the European Single Resolution Fund’s contribution rates in other European cities are predicted to decrease significantly.

David Postings, chief executive of UK Finance, said: “This report shows that the banking sector is a major contributor to the UK’s tax base and supports a large number of skilled jobs. Through its activities, the sector also delivers growth and investment up and down the country.

“Banks based here pay a significantly higher rate of tax than those in New York. And our analysis shows that they are expected to pay notably higher rates of tax in future years than in other major European capitals. This is something that needs to be considered in terms of the UK’s international competitiveness.”