Tax receipts from financial services sector fall 13%

THE TAX contribution from the UK financial services industry in the 2009/10 financial year fell by £8bn – down 13% from the previous financial year, according to a report by PwC for the City of London Corporation.

The financial services industry contributed an estimated £53.4bn to UK government taxes in the 2009/10 tax year, accounting for 11.2% of the total UK tax take, the research also found.

The fall in the City’s tax contribution was due to reduced levels of corporation and employment tax, the research said.

The figures do not include any receipts from the 50% top rate of income tax or the bank payroll tax, which although charged on 2009 bonuses was not paid until the subsequent year.

Stuart Fraser, policy chairman at the City of London Corporation, said: “At a time when the coalition government are making difficult decisions on expenditure, this report highlights the vital contribution made by the financial services industry to the Exchequer even as the effects of the crisis weighed on institutions across the City.”

The 50% income-tax rate, bank payroll tax and other reforms are likely to increase the amount of tax raised from the City over the next few years, he added.

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