The UK’s financial services sector paid a record £75.6bn in tax last year, according to a new report.
The sector’s contribution in the fiscal year ended March 2020 included £34.1bn in taxes borne directly by firms and an additional £41.5bn from employees and customers, according to a recent report by the City of London Corporation.
Banks, insurers and other financial firms form a significant portion of the economy, accounting for approximately three per cent of Britain’s workforce and its tax bill amounts to over 10 per cent of the government’s total receipts.
Despite the economic hit from the pandemic, the sector’s total tax contribution is expected to remain robust, paying out between £71.1bn and £75.7bn, according to estimates.
“While the pace and path of the recovery post-pandemic might still be uncertain, the financial services sector’s contribution provides a much-needed element of stability,” said Catherine McGuinness, policy chair at the corporations.
“The sector is vital to supporting prosperity right across the country and will play a critical role in fuelling our economic success.”
While the sector plays a significant role in the economy, it was essentially omitted from the post-Brexit trade agreement. UK firms have been forced to negotiate a patchwork of individual EU nations’ regulations.
The only way the City of London can maintain its pre-Brexit access to the bloc if Brussels unilaterally grants regulatory equivalence. However the EU believes the UK is destined to diverge from its financial services regulations and has withheld the designation.