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  1. ITV Report

Britain's financial sector makes record tax payment, despite fears over Brexit

A total of £72.1 billion in tax was paid to HMRC by the industry, a 1% increase from 2015. Credit: PA

Britain’s financial sector paid a record tax bill in 2016, raising concern that an exodus of banks post-Brexit could impact public finances.

A total of £72.1 billion in tax was paid to HMRC by the industry, a 1% increase from 2015 and the highest amount paid by the sector since records began 10 years ago.

A PwC report commissioned by the City of London Corporation said the financial sector’s contributions account for 11% of all Government tax receipts, amid fears a relocation of financial services to the continent after Brexit will reduce government coffers.

Tax paid by the financial sector in 12 months is the same as half the annual NHS budget or the bulk of the country’s education budget, Catherine McGuinness, policy chairman at the City of London Corporation, said.

"With Brexit edging ever closer, it is more important than ever to underline just how important the financial services sector is to the rest of the economy," she added.

"While it's too early to gauge how the country's tax-take might suffer if firms chose to move business away from the UK, these findings highlight how vital it is to meet the urgent needs of the sector as part of negotiations."

Financial services also paid an increased amount of corporation tax of £11.6 billion, up from £8.4 billion. The sector has paid £649 billion to the government over the past 10 years.

The report comes as international banks, insurers and asset managers look to move some of their UK operations to Europe ahead of Brexit to safeguard against the loss of passporting rights, which currently give UK-based financial services access to the EU.

"Since the UK voted to leave the EU, the financial services sector has been crystal clear: We need urgent clarification around a transitional deal, a new mutually beneficial trading relationship with the EU, and continued access to the brightest talent," McGuinness said.