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£71.4bn tax contribution from financial services

The UK financial services sector contributed £71.4bn in tax last year, according to a report by the City of London (LSE: CIN.L - news) and accountants PWC.

The figure shows the potential effect on the Government's coffers if the UK leaves the European single market after Brexit.

Nearly a quarter of turnover from the financial services industry in the last financial year "went straight into public coffers", the report said.

This means the finance sector paid 11.5% of the UK's total tax bill for the 12 months to 31 March.

Financial services employ 1.1 million people in the UK - 3.4% of the workforce.

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The average amount of tax paid per worker in the sector is £32,000.

But many of the sector's bosses have expressed fears that they will not be able to trade with Europe if the Government takes a so-called hard Brexit from the European Union.

Their main concern is whether the UK can keep passporting rights which allow them to trade freely with the EU's members without needing different permits for each country.

There are also fears that other European centres, such as Dublin and Frankfurt, may capitalise on the uncertainty and step-in to take some of London's business.

Some banks have already said they will move workers out of the UK due to Brexit.

Mark Boleat, policy chairman for the City of London, said: "In light of the UK's decision to leave the EU, these new findings not only demonstrate the significant contribution made to Government revenues, but are also key in
helping us to understand the potential impact of Brexit on different sub-sectors within financial services."

"As one (Other OTC: IUSDF - news) of the UK's biggest service exporters, it's understandable the sector also contributes a considerable amount of tax. Despite this, the sector arguably stands most to lose as negotiations loom.

"It makes it clear the argument that Government should be engaging with firms as it approaches talks with the remaining EU 27, and the pulling of the political trigger."