16 December 2010
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.
Ends
Notes for editors
A
full version of the report is available to download
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.
PwC firms provide industry-focused assurance, tax and advisory
services to enhance value for their clients. More than 161,000
people in 154 countries in firms across the PwC network share their
thinking, experience and solutions to develop fresh perspectives
and practical advice. See pwc.com for more information.
"PwC" is the brand under which member firms of
PricewaterhouseCoopers International Limited (PwCIL) operate and
provide services. Together, these firms form the PwC network. Each
firm in the network is a separate legal entity and does not act as
agent of PwCIL or any other member firm. PwCIL does not provide any
services to clients. PwCIL is not responsible or liable for the
acts or omissions of any of its member firms nor can it control the
exercise of their professional judgment or bind them in any
way.
For press enquiries please contact Sanjay Odedra (020 7332 1835,
sanjay.odedra@cityoflondon.gov.uk
or James Abbott (020 7332 1754)