Treasury rakes in £63 billion from financial services industry

Accountants may be interested to learn that the financial services industry contributed £63 billion to the Treasury coffers last year, up 18% on the year before.

The City of London corporation report, compiled by PwC, showed that the finance sector contributed 12.1% of the total tax take for the UK. This was up from £53.4 billion in the previous financial year and was attributed to increases in the corporation tax, employment tax and VAT paid out and collected.

£3.4 billion of the total went to pay the bank payroll tax; the one-off charge on 2009 bonuses. However, PwC’s research did not take the new bank levy into consideration, nor did it include the full impact of the VAT increase.

The City of London corporation’s policy chairman, Stuart Fraser, said these figures demonstrate the massive contribution the financial services sector makes to HMRC and the UK economy as a whole. At a time when Europe is questioning the value of the City, this contribution cannot be undermined especially at such an economically challenging time.

However, he went on to say that the UK must make sure it does not cross a tipping point with regards to taxation. An impact assessment from the European Commission found that between 70% and 90% of trading in derivatives could move away from Europe if a tax on financial transactions is implemented.

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