Financial services paid record-breaking £75.5bn in taxes – report
British-based banks and financial services handed over £75.5 billion in taxes last year, accounting for more than £1 in every £10 paid to the Government, according to new figures.
The total was made up of £33.4 billion of direct taxes including corporation tax and business rates and £42.1 billion through indirect ones such as employee National Insurance contributions, the City of London Corporation said.
This was slightly up on the previous year’s £75 billion, despite the political and economic uncertainty, although corporation tax on profits fell for the first time since 2014.
The report, by PwC and commissioned by the corporation, added that financial services firms employ 1.1 million people across the country – around 3% of all UK employment – making taxes on workers the highest contributing factor in the industry.
It means 10.5% of all taxes collected in the year to March 31 were paid by the sector, the Total Tax Contribution of UK Financial Services report added.
Analysts also discovered that challenger banks – which tend to have smaller workforces – saw 34% of their total tax bill being handed over in corporation tax, compared with 15% across the entire banking sector.
Challenger’s employment tax contribution was just 37%, compared with the sector’s overall average of 50%.
Catherine McGuinness, policy chair at the City of London Corporation, said: “Despite a challenging economic climate and uncertainty around Brexit, the sector has maintained its tax contributions from the record high of last year.
“It is only right that the City continues to make a fair contribution to support the wider economy and public services.
“With Brexit looming, however, the UK must remain competitive to safeguard the sector’s employment base and significant tax contribution.
“It will play a critical role in fuelling our economic success after we leave the European Union.”
Andrew Kail, head of financial services at PwC, added: “New ways of working, operational business models and technological disruption have the potential to change the employment profile – and therefore the tax profile – of firms across the sector.
“It’s important that we look closely at our tax system to ensure it’s fit for new ways of working and doing business while optimising the competitiveness of the sector post-Brexit.”