THE UK’s financial services sector paid its highest tax bill on record last year, raising fears that a Brexit banking exodus could ultimately harm Government coffers.
The industry shelled out a total of £72.1 billion in tax contributions in the year to March 31, marking a one per cent increase from a year earlier and resulting in the highest amount that the sector is recorded to have paid in the 10 years that data has been collected.
The report, drafted by consultancy PwC and commissioned by the City of London Corporation, showed that the sector’s contributions currently account for 11 per cent of all Government tax receipts, with employment taxes making up the bulk at £31.4 billion. It raises fears that the loss of bankers and other financial services workers to rival financial hubs such as Frankfurt and Paris after Brexit will ultimately impact public finances.
Catherine McGuinness, policy chairman at the City of London Corporation, said that the amount of tax paid by the sector over just one year could make up for half of the annual NHS budget or “the lion’s share” of the UK education budget.
She said: “With Brexit edging ever closer, it is more important than ever to underline just how important the financial services sector is to the rest of the economy.”
She added: “While it’s too early to gauge how the country’s tax-take might suffer if firms chose to move business away from the UK, these findings highlight how vital it is to meet the urgent needs of the sector as part of negotiations.”
Alongside employment tax, financial services also paid out more in corporation tax, with the bill rising from £8.4 billion to £11.6 billion, while VAT accounted for 14 per cent of its total contributions, leaving taxes like stamp duty and business rates to make up the remaining sum.
Over the past 10 years, the sector paid a total tax bill of £649 billion.
The research comes as a raft of international banks, insurers and asset managers prepare to shift portions of their UK operations to the continent ahead of Britain leaving the EU in hopes of safeguarding against the loss of passporting rights which currently give UK-based financial services cross-border access to the bloc.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel