London pays biggest share of UK tax revenue

England’s capital accounted for just under 30 per cent of the nation’s ‘economy taxes’ in 2014/15, according to new research from the Centre for Cities, which found that tax revenues within London have outpaced the vast majority of other major cities and towns across the UK in the last 10 years.

The analysis covered taxes dependent on the growth of the UK economy; most notably income tax, land and property taxes and VAT – amounting to 88 per cent of all tax revenues.

It showed that London accounted for 28.6 per cent of the UK’s overall tax revenues for 2014/15 and in the last decade it was responsible for more than two-fifths (43 per cent) of the ‘economy tax’ generated across major towns and cities.

In stark contrast to London – which saw the amount of tax it generated increase in real terms by 25 per cent (£28bn) – all other 62 British cities which contribute most heavily to national tax revenues have experienced little or no growth in their tax intake during the last 10 years.

In real terms, Manchester’s tax revenues grew between 2004/05 and 2014/15 by just one per cent, while other major cities such as Leeds, Birmingham and Glasgow all recorded considerable declines in their tax revenues during the last decade.

Similarly, ‘work taxes’ – a subset of income tax and National Insurance contributions – shows that the London generated £91bn in 2014/15, more than the next 60 British cities combined.

Alexandra Jones, chief executive, Centre for Cities, said: “The UK’s growing reliance on London’s taxes underlines the importance of ensuring that the capital prospers in a post-Brexit world.

“But our research also shows that more must be done in the years ahead to strengthen the economies and tax bases of other city regions such as Greater Manchester, the West Midlands and the North East, many of which voted strongly for Leave.”

Date published 8 Jul 2016 | Last updated 8 Jul 2016