The amount of taxes generated by the UK’s banking sector has risen to £34.2bn in the year to March, underscoring the importance of financial services to the wider economy. The figures, revealed today, have generated fresh calls to defend the City during upcoming Brexit negotiations.
A study published today by professional services firm PwC on behalf of the British Bankers’ Association (BBA), found that lenders’ total tax generation has risen by 3.6 per cent compared with £33bn in 2015 and by 9.3 per cent compared with £31.3bn in 2014.
The taxes raised from banks account for 5.5 per cent of government receipts. Of the total tax take, almost half came from overseas banks.
“It is more important than ever that the UK remains a competitive place to do business for both domestic and foreign banks, with a propionate and stable tax environment,” said BBA chief executive Anthony Browne. “This matters because banking is the UK’s leading export industry, employs over half a million people right across the UK, two thirds of which are based outside London.”
In the run up to Brexit, the BBA is pushing for certainty on passporting, a set of rights which allow certain financial firms in the UK to do business elsewhere in the EU and, crucially, vice versa. There are also concerns the government may not grant the industry a transition period, which would extend the rights currently enjoyed by banks for a long enough period of time for them to adjust to Brexit’s implications. Yesterday marked a key milestone in the UK’s departure from the EU as the Supreme Court revealed it had set aside four days from 5 December to hear the government's appeal on the controversial Article 50 case.
Miles Celic, CEO at top lobby group TheCityUK, said: “When [the financial and related professional services, including banking] ecosystem does well, the economy does well – something which we are sure will be at the forefront of ministers’ minds as they enter into the forthcoming Brexit negotiations.”
Andrew Packman, tax partner at PwC and co-author of the report, told City A.M.: “It’s self-evident that, given the contribution that the banks and the broader financial services sector makes to the economy, making sure that London remains a good place to run an international banking operation from is clearly very important.”
Immigration remains a central issue of concern for many in the City. Michael Martins, an economist at the Institute of Directors, said: “A crucial aspect of the City’s competitiveness is its access to the most skilled people, from not just Europe, but the world.”