Education Costs Fully Covered By The UK’s Finance Industry

May 21, 2024

The UK’s financial sector contributed record tax receipts to the Treasury last year, underscoring its significance to the broader economy. According to PwC research, financial services firms contributed over £110 billion in taxes, representing 12.3 per cent of total tax receipts. This substantial amount is enough to cover the entire education budget. Since 2016, the sector’s tax contribution has increased by £23.3 billion.

Financial and professional services remain a significant and consistent source of tax revenue for the government, as highlighted by Miles Celic, chief executive at TheCityUK. He emphasized the importance of a stable, predictable, and competitive tax environment to maintain and bolster the UK’s position as a premier destination for investment and business growth.

The research revealed that financial services firms paid £18.4 billion in corporation tax, making them the largest contributors to UK corporation tax receipts. Professional services firms, including accountancies and consultancies, contributed £6 billion.

A major portion of the tax revenue came from employment taxes such as income tax and national insurance. Employees in financial services contributed 14 per cent of all employment taxes, with the average tax paid per employee estimated at around £30,500, significantly higher than the national average of £11,866. TheCityUK noted this highlights the industry’s vital role in providing high-skill, high-wage jobs.

Chris Hayward, policy chairman at the City of London Corporation, remarked on the importance of supporting the sector, calling it an engine for growth. He advocated for a robust and interconnected financial and professional services strategy to unite public and private sectors, driving economic growth across the UK.

This research follows a new EY survey indicating the UK has surpassed its European rivals to become the continent’s leading financial hub. The UK now hosts a third of all European FDI projects focused on financial services, an increase from 26 per cent in 2022, with France and Germany tied for second place at 12 per cent each.