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UK financial services tax contribution rises to £71.4bn

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The UK financial services sector contributed £71.4 billion in taxes in the year to March 2016, a report from PwC and the City of London suggests.

The figure is up £4.9 billion from 2015’s estimate based on financial service firm survey data, and is said to account for 11.5 per cent of total tax receipts.

The increase was driven by corporation tax and bank levy payouts, PwC and City of London say, which rose from £7.6 billion to £8.4 billion and from £2.7 billion to £3.4 billion respectively.

The estimate is based on data from 50 financial services companies on the UK tax they paid.

For insurers who participated in the study, 10 per cent of their taxes came from corporation tax and 30 per cent from employment taxes such as employer national insurance contributions.

For UK based banks, 46 per cent of revenues come from employment taxes and just 7 per cent from corporation tax.

The report reads: “In light of the UK’s decision to leave the EU, these new findings not only demonstrate the significant contribution made across financial services to UK Government revenues, but are also key in helping us to understand the potential impact of Brexit on different sub-sectors within financial services.”

Total taxes as a percentage of profits before taxes rose by 5 percentage points to hit 35.8 per cent.

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