Financial Services sector makes its highest recorded tax contribution

The financial services sector contributed £71.4 billion in UK tax last year, highlighting the potential hit to government coffers if Brexit results in restricted access to the EU’s single market, the City of London Corporation has said.

A report produced by the City of London Corporation and accountancy giant PwC shows that nearly a quarter of financial services’ turnover in the last financial year “went straight to the public coffers,” and accounted for 11.5 per cent of the UK’s total tax receipts for the 12 months to March 31.

It marks the sector’s highest tax total in the report’s nine-year history, thanks in part to corporate tax reforms that delivered £8.4 billion in the last financial year, and the bank levy which saw lenders pay out £3.4 billion over the same period.

But those contributions hang in the balance ahead of Brexit negotiations with the EU.

London’s financial firms have become increasingly concerned about their ability to trade with Europe if the UK Government opts for a “hard Brexit”.

Financial services currently employ 1.1 million people across the UK, amounting to 3.4 per cent of the national workforce.

Mark Boleat, policy chairman for the City of London, said: “These new findings demonstrate the significant contribution made to government revenues, but are also key in helping us understand the potential impact of Brexit on different sub-sectors within financial services.”

His comments come amid fears that rival financial centres like Dublin, Frankfurt and Paris could end up siphoning off some of the City’s business.