16 December 2011
UK Financial Services increases tax contribution to £63bn in
2010/11
The UK financial services sector made an increased contribution
to the public finances during the year to March 2011 even as the
economy continued to suffer the effects of the European sovereign
debt crisis, 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.
Stuart Fraser, Policy Chairman at the City of London
Corporation, said:
“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 makes even in this extremely
challenging economic environment.
"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 European Commission’s own impact assessment
highlighted that between 70 and 90 per cent of all derivatives
trading could move outside of Europe if a financial transaction tax
was implemented. We must continue to make the case that such a move
would hurt the City, and hurt Europe.
“Domestically, a stable and sustainable tax regime is essential
to ensuring the perception of our international competitiveness is
not damaged. Greater clarity as to when the 50p tax rate will be
lowered would help to reassure internationally mobile firms that
the UK is committed to promoting a welcoming business
environment.”
The sector employs more than 1.1 million employees, which is a
significant part (3.9%) of the total UK workforce.
The research uses the PwC Total Tax Contribution Framework. The
data provided by 43 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 to editors
- A full version of the report is available to download here:
www.cityoflondon.gov.uk/specialinterestpapers
- 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