Financial services tax contribution jumps 18% to £63bn
By Maximilian Clarke
Tax revenue from the UK's financial services sector rocketed by 18% during the year to March 2011 to 12.1% of the entire UK tax taking; even as the economy continued to suffer the effects of the European sovereign debt crisis
This is according to a new report for the City of London Corporation by PwC.
The industry contributed an estimated £63.0bn to UK government taxes in the 2010/11 financial year, accounting for 12.1% of the total UK tax take. The study does not include the new bank levy paid for the first time in 2011 or the full impact of the 20% VAT rate.
This total has jumped by £9.6bn (18.0%) from the previous fiscal year due to increased levels of corporation tax, VAT and employment tax both borne and collected. The one-off bank payroll tax, charged on 2009 bonuses, was paid in this year totalling £3.4bn. However, the bank levy was introduced after the study’s period closed and the 20% VAT did not take full effect in the period.
“At a time when the City’s value is being questioned, both in the UK and in Europe, these figures highlight the huge fiscal contribution it continues to make even in this extremely challenging economic environment,” commented Stuart Fraser, Policy Chairman at the City of London Corporation.
"The industry continues to be resilient but the ongoing sovereign debt crisis highlights potential dangers ahead. In light of recent political events, it should be remembered that London is Europe’s leading international financial and business centre, and the success of UK-based financial services is integral to the success of our counterparts across the Channel. Key to this is maintaining a vibrant single market that fosters jobs and growth across Europe.
“That is why we must be wary of crossing a tipping point when it comes to taxation. The... continued on page two >