Brexit

Facing #Brexit unknowns, UK financial sector pays record taxes

Published

6 years ago

January 8, 2020

Britain’s financial industry paid a record near-$100 billion in taxes in the year to March, reaffirming its central role in funding the state at a time when its future prospects have been clouded by Brexit, writes Huw Jones.

The £75.5 billion raised equated to one pound in 10 of all UK tax receipts, the City of London Corporation said in a report on Tuesday, adding that this month’s UK departure from the European Union would impact future contributions.

With Prime Minister Boris Johnson yet to start trade negotiations with the EU he says must be concluded during a transition period that ends in December, the industry is still waiting to see how much direct access it will have in future to the bloc, its biggest export market.

The sector is the economy’s most important, employing 1.1 million people nationwide.

Patchy access could see an acceleration of the minimal moves so far by Britain-based staff of banks, insurers and asset managers to over 300 new hubs set up inside the EU, denting the City’s global role.

“Legislative changes, technological innovation and the uncertainty surrounding Brexit are all expected to have some impact on the total tax contributions of the sector,” the report compiled by consultants PwC for the City said.

Buoyant contributions from finance will be critical for a UK government re-elected last month on promises of increased spending on health care.

With Brexit looming “the UK must remain competitive to safeguard the sector’s employment base and significant tax contribution” added Catherine McGuinness, policy chairwoman at the City of London Corporation, the municipal authority for the financial district.

“It will play a critical role in fuelling our economic success after we leave the European Union.”

The City is pressing the government to avoid making it harder to recruit internationally after Brexit. Banks have also called for cuts in taxes, including a levy introduced after Britain bailed out lenders during the financial crisis.

Financial sector workers generated an average of 31,463 pounds in total employment taxes, the annual tax report - the City’s 12th - said, well above the average UK salary in the economy overall.

Graphic: City of London Tax Report, here