This is the third year in a row that total tax payments made by the sector have increased. According to the report, the last time the industry paid such high levels of taxes was 2007, before the financial crisis.
City of London Corporation policy chairman Mark Boleat said the report “showed the enormous value of the financial services sector in underpinning the wider economy, the government’s spending programme, and public services.
“Eight years after the financial crisis, the industry is growing at a strong pace, and is well and truly recovered from the economic shocks brought about by the crash,” he added.
It was suggested that the increased tax contribution was driven by increases in the amount generated from corporation tax, and the bank levy, which brought in £7.6bn and £2.7bn respectively for the Treasury.
Around 1.1m people work in the sector, accounting for 3.4 per cent of the country’s workforce. Employer’s national insurance remained the largest tax levied on financial services companies, accounting for 33.5 per cent of taxes collected.
Andrew Packman, PwC’s tax transparency and total tax contribution leader said: “The policy of successive governments has meant that the burden of tax on companies has shifted from profit-based taxes to other business taxes and this is particularly significant for the financial services sector.
“Irrecoverable VAT and employers’ NI together make up over half of taxes borne, with corporation tax less than a fifth. It is crucial to raise awareness of these other business taxes to understand the full contribution that the financial services sector makes to the public finances.”
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