The insurance industry made a total contribution of £10.4bn to the Exchequer, a report from the Association of British Insurers (ABI) and PWC has revealed.
The contribution was bigger than the entire Home Office budget, which currently stands at £10.2bn, and insurance companies in the Hundred Group paid the third highest corporation tax of any sector.
The independent report found that corporation tax paid by insurers was £2.7bn in 2010 - or 6.4% of total government corporation tax receipts. This was a 50% jump in corporation tax paid out by ABI members since 2009.
The £10.4bn total tax contribution breaks down as £4.6bn taxes borne and £5.8bn taxes collected on behalf of government including Insurance Premium Tax.
Crucial to the economy
Otto Thoresen, director general at the ABI, said: "The tax paid by the UK insurance industry could pay for the whole of the Home Office budget, or fund the budgets of the Departments for Transport, Communities and the Foreign Office put together.
"Insurers are crucial to the economy. Our total tax contribution is now higher than it was before the recession showing the important role the insurance industry is playing in the recovery and how resilient the industry is during tough times."
An important contribution
He continued: "These figures highlight the importance of consistent, competitive tax rules which could help the industry to grow further so that it can continue to make an important contribution to the UK coffers.
"We are talking to the government about how to make the UK tax system an asset for the UK when it comes to retaining and attracting insurers to the UK. It is important we encourage our good, successful UK businesses to expand and grow rather than having rules which make the UK a less attractive place to base a business."
The ABI noted that the wider insurance industry was one of the biggest private employers in the country. It detailed that insurance employs over 275,000 people of which 152,000 work for ABI member companies, who pay employment taxes worth £2.64bn.
