Lloyds will not pay corporation tax on profits, news report claims

1 March 2011

Lloyds Banking Group (LBG) will avoid paying any corporation tax until it begins generating higher profits, a news report has claimed.

The financial institution, which is 41 per cent owned by the UK tax-payer, will have to make more than £15 billion before it pays the levy, the Daily Telegraph reported.

Lloyds recently released official statistics showing that the bank recorded a pre-tax profit of £2.2 billion ($3.54 billion) during 2010, a figure which was up from a £6.3 billion pre-tax loss seen the previous year.

Eric Daniels, the bank’s outgoing chief executive officer, is set to receive a bonus worth £1.45 million from the firm.

Tim Tookey, finance director, told the newspaper: "I would have loved to have paid tax because that would have meant we were making more money. We look forward to the day we are making higher tax payments.”

Lloyds has avoided making the payments because of the amount of deferred losses it is able to write off against the liabilities.

Barclays recently revealed that it paid £113 million in corporation tax during 2009 after making a profit of £11.6 billion.

Meanwhile a study by the Financial Ombudsman showed that Lloyds was the financial institution which received the most customer complaints during the last six months of 2010.

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