City of London financial sector leaders are urging Chancellor John Healey to simplify the UK's tax system and avoid imposing new taxes on financial services in his upcoming budget. Concerns are growing that Healey may target the sector for additional revenue, which industry groups argue would harm competitiveness and investment.
The UK's financial services sector is a major contributor to the economy and tax revenue. Any significant tax changes could impact its global competitiveness, investment levels, and the overall health of the London Stock Exchange, potentially affecting broader economic growth.
City of London financial sector leaders have urged Chancellor John Healey to simplify the UK's tax system and avoid imposing new taxes on financial services in his upcoming budget. The group TheCityUK, which represents major banks and money managers, is concerned that Healey might use his inaugural budget to increase taxes on the sector.
Miles Celic, chief executive of TheCityUK, stated in a letter to the chancellor that financial services are already significant contributors to tax revenue and pay more in corporation tax than any other sector. He emphasized the need for Britain to remain competitive in a global market, highlighting that the UK's tax system is the most complicated in the OECD, which imposes a major cost on businesses and hinders competitiveness.
Celic cautioned against "sector-specific taxes" on financial and professional services, industries previously identified by the government as key drivers of economic growth. The group also pointed out that the 0.5% levy on share transactions in British companies makes the UK an "international outlier," weakening the London Stock Exchange and domestic investment.
Additionally, TheCityUK suggested that ministers should not alter the multi-billion pound interest payments on cash reserves held by commercial lenders at the Bank of England. Research from Dan Neidle’s Tax Policy Associates indicates that fully abolishing the share transaction charge would yield the largest growth effect compared to other planned government tax cuts, due to a potential boost in trading levels across UK capital markets.
A Treasury spokesperson commented that decisions on tax are for the Chancellor to announce at fiscal events and declined to comment on rumors, speculation, or proposals.
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