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The Total Tax Contribution of UK-based financial and related professional services

21 May 2024
4 minutes
Read the press release: Read the full report: Download the full report: (PDF)
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Read the press release: Read the full report: Download the full report: (PDF)

This is the first-ever Total Tax Contribution (TTC) study for the financial and related professional services industry, conducted by PwC for the City of London Corporation and TheCityUK. The study gathers comprehensive data on all business taxes borne and collected by firms engaged in financial and related professional services. Official, publicly available tax data by industry exist mainly for corporation tax, but looking at all taxes is vital to enhance the understanding of the full contribution the industry makes to the broader economy. In particular, the analysis highlights the importance of jobs generated by the industry and the significant contribution it makes through employment taxes.

Highlights

01

The estimated TTC of the financial and related professional services industry was £110.2bn in 2023. This was the highest contribution since data has been recorded, both for the industry as a whole and for the financial services and related professional services sectors individually. This is equivalent to 12.3% of total UK tax receipts, more than the UK government’s education budget, or more than half the health budget.

02

At 50.0% of the total, employment taxes are the largest component of the estimated TTC. The industry provides many highly skilled, high-wage jobs. Employment taxes were estimated to total £55.1bn, with an average tax paid per employee of £30,500. This compares to an estimated national average of £11,866.

03

According to HMRC data, the financial services sector, inclusive of the bank levy and bank surcharge, was the largest contributor to total UK corporation tax receipts, accounting for £18.4bn or 22% of total corporation tax receipts in the year to March 2023. The professional, scientific, and technical services sector, which includes legal, accounting, and management consulting, was the fourth largest contributor to UK corporation tax in the financial year 2022-2023.

04

The industry paid £48.3bn in taxes borne, which are taxes that affect businesses’ profitability and competitiveness, such as corporation tax and employer taxes. The industry also paid £61.8bn in taxes collected, which are the taxes that businesses administer on behalf of the government, such as employee taxes and VAT.

A summary of the TTC of UK-based financial and related professional services

The Total Tax
Contribution of the
financial and
related professional
services industry
was
£110.2bn
in 2023.

Employment taxes were the largest element of the industry’s Total Tax Contribution totalling
£55.1bn
or half of its overall total.

The financial services sector made a tax contribution of
£79.3bn
and the related professional services sector
£30.9bn

The industry’s latest Total Tax Contribution was equivalent to 12.3% of total UK tax receipts, more than the UK government’s annual education budget, or more than half the health budget.

Average tax paid per employee in financial and related professional
services was
£30,500
compared to a national average of £11,866.

At
£18.4bn,
the financial services sector’s corporation tax payments were the largest of any sector in the UK.

The financial and related professional services industry is at the heart of the UK economy. This research has shown that it makes a significant contribution of an estimated £110.2bn to the UK public finances. This is the highest estimated tax contribution for the industry in the history of our TTC studies. The study has also shown that the industry’s contribution through jobs and employment taxes in particular is a significant and consistent source of tax receipts for the government.

The economic importance of the industry is also shown through its corporation tax payments. HMRC data show that the financial services sector, inclusive of the bank levy and bank surcharge, contributed £18.4bn to UK corporation tax receipts in the year to March 2023, the largest contributor of any sector in the UK. The financial and related professional services industry also pays other taxes beyond corporation tax, but these often receive less visibility.

The UK’s competitiveness will be enhanced by a focus on supporting economic growth, and attracting the investment needed to facilitate this. The financial and related professional services industry will continue to have a core role to play in supporting long-term economic growth by facilitating investment, as well as through its direct contribution to employment and the public finances.

Read the press release: Read the full report: Download the full report:
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