Evidence the UK’s financial services sector is the powerhouse of the country’s economy was revealed in a new report on Tuesday.

Commissioned by the City of London Corporation and the industry group, TheCityUK, the report by PwC shows that Britain’s financial services companies and related professions paid a record £110.2 billion in tax last year, enough to cover the government’s entire annual education budget.

The figure represents 12.3 per cent of the total tax receipts received by the government, and is the equivalent to approximately £1,643 per person in the UK.

According to PwC’s figures, the financial services sector alone contributed about £79.3 billion and the related professional services sector added another £30.9 billion, record figures for both sectors.

“These latest figures showcase, once again, how the UK financial and professional services sector is an engine for growth,” said Chris Hayward, policy chairman at the City of London Corporation.

“It’s vital that we continue to support the sector. The UK needs a robust and interconnected financial and professional services strategy that will bring public and private sectors together to enact a bold global ambition, provide clarity to business and drive economic growth across the UK.”

‘Focus on where we excel’

The largest slice of the total came from employment taxes, which fed £55.1 billion, or 14 per cent of all employment taxes, into the Treasury’s coffers in the 2022/2023 financial year.

The average tax paid per employee in the industry was estimated to be around £30,500, nearly triple the national average of £11,866.

“It is critical that the government prioritises creating a tax environment that is stable, predictable, and competitive to maintain and strengthen the UK’s position as a world-class destination for investment and business growth,” said Miles Celic, chief executive at TheCityUK.

On the corporation tax side, the financial services sector paid £18.4 billion, while the related professional legal, accounting, technical and management consultancy firms ploughed another £6 billion into the government’s tax treasure chest.

Mr Hayward said that the numbers not only point to the enormous strength of the UK’s financial services sector but also to its status in global trade terms.

“The UK is the second largest services exporter in the world, so let’s focus on where we excel,” he said.

“Creating a global network of agreements focused on data, digital and professional qualifications will spur trade and spur economic growth.”

Updated: May 21, 2024, 3:57 PM