Tax from UK’s financial sector pays for the country’s entire education budget

The UK’s financial sector contributed record tax receipts to the Treasury last year, underlining the sector’s importance to the wider economy.

According to research conducted by PwC, financial services firms contributed over £110bn in taxes last year, making up 12.3 per cent of total tax receipts. This means it could pay for the entire education budget.

Looking back to 2016, the financial sector’s tax contribution has increased by £23.3bn. Financial and related professional services are a significant and consistent source of tax revenue for the government, Miles Celic, chief executive at TheCityUK, said.

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.

The research showed that financial services firms paid £18.4bn in corporation tax, making the sector the largest contributor to UK corporation tax receipts. Professional services firms including accountancies and consultancies contributed £6bn.

The bulk of the tax take came from employment taxes, like income tax and national insurance. 14 per cent of all employment taxes came from people employed by financial services firms.

The average tax paid per employee in the industry was estimated to be around £30,500, significantly higher than the national average of £11,866. TheCityUK said this shows the industry’s vital role in providing high-skill, high-wage jobs.