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Financial services contributes the most tax

The UK financial services industry was the highest contributor of corporation tax to the UK exchequer in the year up to March 2011, a new report for the City of London Corporation by PwC shows.

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

The totals do not include the 50% top rate of tax or the Bank Payroll Tax, which although charged on 2009 bonuses was not paid until the subsequent year.

This total has fallen by £8bn, from 13% from the previous fiscal year due to reduced levels of corporation and employment tax.

Nonetheless, the financial services sector has overtaken North Sea oil and gas to become once again the largest payer of corporation tax in 2010 at £5.6bn.

It also employed over one million workers as of March, which helped to generate

£24.5bn in employment taxes.

Stuart Fraser, policy chairman at the City of London Corporation, says: “The industry has demonstrated resilience in these challenging global economic conditions

but we must be wary of crossing a threshold when it comes to taxation.

“The 50 per cent tax rate, Bank Payroll Tax and other reforms are likely to increase the sum raised from the City over the next few years. However, we need these revenues to be sustainable – as acknowledged by the chancellor during the Comprehensive Spending Review – and the only way to achieve this is by creating a business environment that is both stable and internationally competitive.

A spokesman for the British Bankers’ Association says: “The financial services sector is still the largest single contributor to the Exchequer and one of the UK’s largest employers and this report highlights the role we play in relation to other sectors.

“We fully understand our responsibility to society and are determined to play a full role in the UK economy’s recovery by continuing to support our individual and business customers.”

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