The firm’s research suggests that £18.1bn of the sector’s tax contribution came from UK banks, while £17.3bn was contributed by foreign banks. Taxes borne - those that are a direct cost to a company - accounted for £19bn of the total while taxes collected made up £16.4bn

This year’s survey included the impact of the bank surcharge, introduced in January 2016, which generated £1.1bn in payments from the sector. The introduction of the surcharge, along with an increase in corporation tax resulting from increased profitability, loss relief and compensation payment restrictions, drove an 11% increase in taxes borne in 2016/17 compared with the previous year’s total of £34.2bn.

Receipts of corporation tax, the bank levy and the surcharge (£8.9bn combined) are 22% higher than corporation tax receipts before the financial crisis (£7.3bn in 2007).

Andrew Packman, tax transparency and total tax contribution (TTC) partner at PwC, said: ‘This report shows that the banking sector makes a significant contribution to the UK’s public finances. Tax contributions have recovered consistently since the financial crisis.

‘While the sector is in a strong position to face future challenges, this report underlines the importance of the banking sector and the need to ensure that the UK retains its strong position as a leading financial centre.’

Employment taxes remained the largest tax for the banking sector, making up £18.4bn of the total contribution, up from £17.8bn last year. Of this, 53.7% was paid by foreign banks which employed 25.3% of the employees in the study.

The report found that the banking sector creates employment for 1.6% of the UK workforce and contributes 7.2% of all UK employment tax receipts. An estimated £4.5bn was paid by the UK banking sector in irrecoverable VAT.

Report by Pat Sweet