City of London Corporation urges Budget to protect financial and professional services

Policy Chairman Chris Hayward appealed to the Chancellor to avoid any policy moves that could weaken the UK’s financial and professional services industry. He stressed the sector’s role in delivering growth across the country and asked that no new sector-specific taxes be introduced while the existing VAT exemption for financial services be preserved.

Economic weight of the sector

Data supplied by the corporation show the industry produces £323 billion of output each year and contributes over £110 billion in tax receipts – roughly 12 % of all UK tax revenue. It sustains 2.5 million jobs, with about two-thirds located outside London, highlighting its nationwide importance. Hayward noted that public services such as social care rely on the tax income generated by the sector. Recent research cited by the corporation also suggests the UK is falling behind rivals in attracting foreign investment, underscoring the need to protect the sector’s competitive edge.

Tax and regulatory proposals

The briefing opposed a proposed windfall tax on banks and any broader sector-specific levy, pointing out that UK banks already face higher effective tax rates than peers in Amsterdam, Frankfurt, Dublin and New York. It urged the Chancellor to keep the VAT exemption for financial services intact and to apply a “growth and competitiveness test” to any new tax policy. Hayward called for a focused programme of tax simplification to lower compliance costs and give investors greater certainty, and he advocated a pathway to eventually remove stamp duty on shares to make equity markets more attractive.

The corporation also asked for increased funding and staffing for the Office for Investment: Financial Services, the body that assists firms looking to invest in the UK. It backed the forthcoming InvestConnect platform, described as AI-enabled, which will provide a national route for institutional investors to fund infrastructure and real-asset projects. Faster planning approvals and quicker grid connections were highlighted as essential to unlock strategic developments. Hayward stressed that a pro-growth planning approach is required to meet the Square Mile’s target of nearly 900,000 jobs by 2050, which will need over 1.2 million sq m of commercial floor space, largely through tall buildings.

The corporation warned that a delay in adopting the City Plan 2040 could have measurable economic costs. In a worst-case scenario, the postponement could mean up to 6,800 fewer office-based jobs, a loss of £1.2 billion in gross value added each year, and a reduction of up to £50 million in Community Infrastructure Levy revenue.