An interesting factor to note in the UK tax system for the year 2017 was that the Financial Services (FS) sector had made a Total Tax Contribution (TTC) of £72.1 billion for the period under review. This amounted to 11 per cent of all government receipts, an increase from the 10 per cent of the previous year.
Tax Contribution of UK Financial Services
Taxes borne of £31 billion (up 7.9 per cent from the previous year) and taxes collected of £41.1 billion (down 3.4 per cent from the previous year) made up the total.
The TTC incorporates the taxes that companies bear (pay from their own resources), such as corporation tax, employer’s National Insurance Contributions (NIC), business rates and VAT which is irrecoverable; and taxes companies collect on behalf of the government such as fuel duties, UK PAYE Tax Returns and VAT.
In 2017, corporation tax paid by the FS sector (included bank surcharge for the first time) grew to £11.6 billion from £8.4 billion in 2016. The bank surcharge accounted for £1.1 billion, while the bank levy paid was £3 billion from £3.4 billion.
Income tax deducted from employee salaries comprised the major tax collected by FS companies (over half of the total). Employee NICs, Insurance Premium Tax and tax deducted at source from interest payments were some of the other taxes.
Over the 10 years of conducting the survey, the profile of taxes borne by companies has changed. Corporation tax including bank surcharge accounted for 21.8 per cent of taxes borne. (This was 40.8 per cent in 2007.) The largest tax borne by this group of companies was the Employers NIC (32.4 per cent); in second place was irrecoverable VAT (24.1 per cent).
According to The financial sectors contribution to the UK economy, a report published by the House of Commons Library in April 2017, financial and insurance services contributed £124.2 billion in Gross Value Added (GVA) to the country’s economy in 2016, which was 7.2 per cent of the total GVA of the UK tax system.