13 February 2009
City of London Corporation Research Report: New data on
Financial Services contribution to UK tax
The UK’s financial services sector contributed an estimated
£67.8bn to UK government taxes in the financial year ending 31
March 2007, 13.9% of the total UK tax take a new report by
PricewaterhouseCoopers LLP (PwC) for the City of London Corporation
has found.
The research uses the PwC Total Tax Contribution Framework. The
data provided by 32 large UK financial services companies has been
extrapolated to estimate the total tax take for the financial
services sector as a whole.
Corporation tax was the largest tax borne: financial services
companies paid £12.2bn in corporation tax, more than a quarter
(27.5%) of total corporation tax paid in the UK economy. For every
£1 paid in corporation tax, financial services companies
contributed £1.50 in other taxes borne.
Employers’ National Insurance Contributions (NICs) was the
second largest tax borne by companies, at £7.6bn. In addition,
individuals working in the financial services industry paid £14.9bn
in personal income tax through PAYE and £3.2bn in employees’ NICs.
This means an average of £25,000 tax paid per worker employed in
the financial services’ industry.
The financial services sector contribution to the government’s
tax take is likely to fall as a result of the financial crisis and
economic downturn. The report predicts that, if revenues in the
sector fall by 20%, corporation tax contributions would fall by
£8.4bn to £3.8bn. Employment taxes are also likely to fall as jobs
are lost in the financial services sector. The research predicts
that for every 5 % fall in employment (50,000 job losses) there
would be a reduced contribution in employment taxes of £1.3bn.
A spokesperson for the City of London Corporation said: “This
timely research is a useful snapshot of the financial services
sector’s contribution to the UK’s public finances.” -
Ends
Notes to Editors
- A full version of the report is available to download here:
www.cityoflondon.gov.uk/researchpublications
- The City of London Corporation, which provides local government
services for the Square Mile, the financial and commercial heart of
Britain, works nationally and internationally to maintain and
enhance the City as a world-leading international financial and
business centre.
- About PricewaterhouseCoopers LLP PricewaterhouseCoopers
provides industry-focused assurance, tax and advisory services to
build public trust and enhance value for its clients and their
stakeholders. More than 155,000 people in 153 countries across our
network share their thinking, experience and solutions to develop
fresh perspectives and practical advice.
Unless otherwise indicated, 'PricewaterhouseCoopers' refers to
PricewaterhouseCoopers LLP (www.pwc.com/uk) a limited liability partnership
incorporated in England. PricewaterhouseCoopers LLP is a member
firm of PricewaterhouseCoopers International Limited.
- For press enquiries please contact Laura Citron on 020 7332
1835 or
laura.citron@cityoflondon.gov.uk