The Strategist

UK collects record £ 75 billion in taxes from companies in City of London

12/04/2018 - 09:47

The financial sector is the largest taxpayer in the country, but experts fear a decline in fiscal charges after Brexit.

David Holt
David Holt
Financial services companies in the UK paid a record £ 75 billion in taxes in the last fiscal year. However, the largest players in the City of London warned that Brexit could cut a hole in the industry’s tax revenues in the coming years if the agreement is not reached.

According to a study conducted by PwC and the City of London Corporation, the total tax collection this year exceeded last year's figures by 4%: in 2017, the treasury received £ 72.1 billion from the financiers. However, the result of last year was a record.

The financial sector is the largest UK taxpayer, accounting for more than 10% of all tax revenue.

Meanwhile, the study was conducted in order to estimate the scale of losses in the case of Brexit without a deal: this could lead to the departure of thousands of financial professionals and billions of pounds of assets from the city.

Lawmakers are preparing for a decisive vote on the UK withdrawal agreement, which is scheduled for 11 December. Representatives of the business community fear that the failed negotiations could lead to political turmoil, and the United Kingdom in March 2019 would leave the EU without agreed terms.

“Brexit is getting closer. And now it’s more important than ever that the UK remain competitive to guarantee employment and the tax base of the sector,” said Catherine McGuinness, chairman of the London Policy and Resources Committee. "It is important that we need to avoid a British exit from the EU without a deal. This could jeopardize the financial stability and external activity of the UK," she added.

The return to profit growth of many of the country's largest creditors after many years of costly restructuring and fines for past misconduct after the financial crisis led to a sharp increase in income taxes.

Tax liabilities of corporations (companies) in the industry jumped more than a fifth to £ 14.1 billion in the 2018 fiscal year. Last year, the figure was £ 11.6 billion.

Of this amount, £ 1.8 billion came from a bank surcharge on corporate tax - a fee intended for urban companies, which banks helped to prevent bankruptcy. Financial companies provided more than a quarter (25.1%) of all tax revenues from British corporations.

Wage taxes for this period amounted to £ 32.9 billion: they accounted for most of the sector's fiscal contributions.