Banks sign up to code of practice on tax

The code requires banks to implement strong governance on taxation and allows institutions to use tax planning tactics so long as they do not contradict the intentions of lawmakers.

"We want the banks to play, not just by the letter of the tax law, but by the spirit," Mr Clegg told Parliament. "All of the top 15 banks have now signed the code."

The banks include Barclays, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Santander and UBS.

Chancellor of the Exchequer George Osborne said: "Alongside the bank levy, this shows that the coalition Government is taking action to ensure banks pay their fair share."