UK financial services contributes £53.4bn in tax during 2009/10
The UK financial services industry continued to make a substantial contribution to the public finances during the year to March 2010 even as the economy continued to suffer the effects of the international financial crisis, according to a new report for the City of London Corporation by PwC.
The industry contributed an estimated £53.4bn to UK government taxes in the 2009/10 financial year, accounting for 11.2% of the total UK tax take. The totals do not include the 50% top rate of tax or the Bank Payroll Tax, which although charged on 2009 bonuses was not paid until the subsequent year.
This total has fallen by £8.0bn (13.0%) from the previous fiscal year due to reduced levels of corporation and employment tax. Nonetheless, the financial services sector has overtaken North Sea oil and gas to become once again the largest payer of corporation tax in 2010 (£5.6bn). It also employed over one million workers as of March, which helped to generate £24.5bn in employment taxes.
Stuart Fraser, Policy Chairman at the City of London Corporation, said:
"At a time when the Coalition government are making difficult decisions on expenditure, this report highlights the vital contribution made by the financial services industry to the Exchequer even as the effects of the crisis weighed on institutions across the City.
"The industry has demonstrated resilience in these challenging global economic conditions but we must be wary of crossing a threshold when it comes to taxation.
"The 50 per cent tax rate, Bank Payroll Tax and other reforms are likely to increase the sum raised from the City over the next few years. However, we need these revenues to be sustainable - as acknowledged by the Chancellor during the Comprehensive Spending Review - and the only way to achieve this is by creating a business environment that is both stable and internationally competitive.
"We need to ensure firms operating across the financial and professional services industry see the UK as a good place in which to be based and to invest. Losing the internationally mobile parts of the sector due to uncertainty or the cumulative effect of tax increases would have a major impact on the wider economic recovery."
The research uses the PwC Total Tax Contribution Framework. The data provided by 30 UK financial services companies, across the range of sub-sectors, has been extrapolated to estimate the total tax take for the financial services sector as a whole.
A full version of the report is available to download.
