Finance firms contribute £65bn to UK tax coffers

THE UK’S financial services contributed £65bn in taxes during 2012-13, rising £2bn from last year to make up more than one tenth of all revenues.

Taxes borne by and collected from financial institutions rose to 11.7 per cent of all Her Majesty’s Revenue and Customs (HMRC) in 2012-13, according to research by PwC and the City of London corporation. In the previous year, they made up 11.6 per cent at £63bn.

Despite the reduction in the main rate of corporation tax, which has been trimmed from 28 per cent in 2010 to 26 per cent in 2011, and 24 per cent in 2012, revenues have actually risen.

Her Majesty’s Revenue & Customs (HMRC) collected £6.5bn in corporation tax from financial firms in 2012-13 – up from £5.4bn in the previous year.

But revenues from the bank levy seemed to follow the opposite trend. Although the main rate of the bank levy was increased during 2012, from 0.075 per cent to 0.105 per cent, and rose again to 0.13 per cent this year, the amount raised by the levy stayed flat, at £1.6bn over both financial years.

While contribution of financial services to the UK tax system has declined both as a share of the total and as a headline figure since before the crisis, it has improved considerably from 2010’s doldrums.

On average, the total tax rate for a financial services company stood at 42.5 per cent this year, up three percentage points from 2012, but also well down on 2009’s 57.4 per cent.

“The success of this sector is integral to the country’s future prosperity and this should not be forgotten in the wake of understandable anger over recent controversies,” commented Mark Boleat, the City of London Corporation’s policy chairman.