Historical Significance, Tax System, and Freedom of the City of London Corporation
Nestled within the vibrant metropolis of London, the City of London Corporation emerges as an extraordinary testament to the enduring force of finance and traditions. Occupying a mere square mile, a population of 8,000 people coexist with a wave of 400,000 daily commuters.
While counted among the 33 boroughs that compose London, the City predates them all, an ancient entity that predates even the walls of Parliament itself.
The official motto Domine Dirige Nos is Latin for O Lord direct us.
The City Incorporated by Prescription
The origins of the Corporation’s legal status remain elusive as no surviving records document its initial charter. However, the City of London is deemed incorporated by prescription, signifying its long-standing recognition as a legally constituted entity. Historical references, including the Magna Carta, affirm the City’s ancient liberties and further support this recognition.
Since the time of the Norman Conquest, the City of London Corporation has been granted an array of special privileges. Among these, the oldest documented royal charter, dating back to approximately 1067, was granted to the citizens of the City by William the Conqueror. The charter served to confirm and uphold the rights and privileges that had been enjoyed by the citizens since the reign of Edward the Confessor, whose death in 1066 ultimately paved the way for the Norman conquest.
Over time, the monarchy orchestrated the growth of the city of Westminster, home to the Parliament and Buckingham Palace. Gradually, Westminster expanded and merged with neighboring towns, enveloping the walled and distinct City of London Corporation. Eventually, the collective area came to be known as ‘London’.
The City’s ascent to global prominence came when the British East India Company brought a wave of wealth that would forever transform the fate of this ancient capital. The influx of money put London on the map as the world’s undisputed financial center. Over the centuries, royal charters have consistently fortified and expanded upon the rights bestowed upon the City’s inhabitants.
Current Structure of the Corporation
The City now manages billions of pounds in assets, primarily real estate, through its fund known as “City’s Cash.” This fund supports the City’s financial independence and covers expenses outside taxpayer-funded services, collected through council tax, business rates etc. The City of London publishes an annual report on City’s Cash, detailing its financial performance and holdings, with the most recent report covering the year ended March 31, 2024. Its resources enable the Corporation to function within a unique framework shaped by ancient governance traditions. The key elements of the structure are as follows:
- Lord Mayor
- The ceremonial and civic head of the City, elected annually from among the Aldermen, and acts as an ambassador domestically and internationally.
- Court of Aldermen
- Comprises the Lord Mayor, Aldermen, and honorary positions, responsible for strategic direction and decision-making.
- Court of Common Council
- Primary legislative body, consisting of elected representatives from residents and businesses within the City.
- Livery Companies
- Historic trade associations stemming for medieval guilds with a significant governance role.
- Wards
- 25 geographic areas represented by Aldermen elected for life, allowing residents to vote for Aldermen, Lord Mayor, and Common Council representatives.
- Committees and Departments
- Responsible for planning, finance, policing, cultural heritage, and other functions, administering policies and services within the City.
The City of London Corporation has a committee-based decision-making system where elected Members serve on various committees. A form of government mostly resembling an oligarchy. Specific voting rights vary depending on the type of election. The main three categories of voters are Individuals residing within the City and registered to vote, Businesses also located within the City, and Livery Company voters.
The Tower of London and the Tower Bridge are both owned and maintained by the City of London Corporation.
Historical Context of the Freedom of the City of London
Understanding the Freedom of the City of London significance requires a look into its historical roots. The term ‘freeman’ originally described individuals who were not bound to a feudal lord, granting them the right to earn a living and own property. Historically, the Freedom was a privilege that allowed members of Guilds or Livery Companies to trade within the City. Over the centuries, this concept has broadened, now encompassing many individuals who have a connection to London. The Freedom of the City of London is not just a ceremonial title, it is a living tradition that creates a unique connection to the City of London and continues to cultivate a shared identity among its citizens.
Can You Become a Citizen of the City of London?
You may be wondering, “How can I become a citizen of the City of London?“. While technically impossible, there are several pathways to obtaining the prestigious status of Freeman. The different paths are accessible through a Livery Company. These are historic trade associations which date back to the Middle Ages and represent a wide range of professions. The main routes to this ‘citizenship’ include:
- Servitude: Historically, this route involved serving an apprenticeship with a Livery Company.
- Patrimony: Individuals can inherit the Freedom if their parent was a Freeman at the time of the individual’s birth.
- Nomination: Most common modern method, where individuals are put forward by existing Freemen or Livery Company members.
Freedom by Nomination is open to individuals of all nationalities. To apply for the Freedom by Nomination, candidates must secure nominations from two sponsors who are either Common Councillors, Aldermen, or Liverymen. Common Councillors are elected representatives in the City, Aldermen are senior figures in its governance, and Liverymen are members of Livery Companies.
The application process is straightforward and can be completed online, along with a small fee. Once nominated, individuals take part in a formal ceremony held at Guildhall where they read the ‘Declaration of a Freeman’ and receive a parchment symbolizing their new status. This presentation ceremony concludes the nomination process and publicly recognizes the individual’s new rights and responsibilities as a Freeman.
Honorary Freedom: The Highest Honor
In addition to the standard Freedom, there is the distinction of Honorary Freedom, which represents the City of London’s highest honor. This prestigious title is conferred upon individuals who are invited by the Court of Common Council. Honorary Freedom presentations typically take place in the Mansion House or Guildhall and have included famous recipients such as Winston Churchill and Queen Elizabeth II. This honor recognizes individuals who have made significant contributions to society or their fields.
Guildhall is the administrative and ceremonial headquarters of the City of London Corporation. It encompasses a diverse range of functions, accommodating numerous offices, hosting vital civic events, and serving as a dynamic cultural venue.
Legal Landscape of the City
Governing laws are based on a combination of statutes, common law, and regulations established by the City of London Corporation. At the core, the legal framework applicable within the City of London aligns with the laws of England and Wales. Moreover, the statutes enacted by the national Parliament extend to the City, unless explicitly stated otherwise. Regardless of its unique status, the City follows the same tax laws as the rest of the UK.
| Income Tax | Amount/Rate |
| Personal Allowance | £12,570 |
| Personal Allowance Income Limit | £100,000 |
| £0 – £37,700 | 20% |
| £37,701 – £125,140 | 40% |
| Over £125,140 | 45% |
The UK tax year runs from April 6, 2024, to April 5, 2025.
| Capital Gains Tax | Amount/Rate |
| Exemption | £3,000 |
| Standard Rate | 18% |
| Higher/Additional Rate | 24% |
Other rates apply for specific disposals such as business assets.
| Corporate Tax | Tax Rate |
| Up to £50,000 | 19% |
| Above £250,000 | 25% |
The tax rate gradually increases from the small business rate (19%) to the main corporation tax rate (25%).
| Inheritance Tax | Amount/Rate |
| Exemption (Nil-rate band) | £325,000 |
| IHT Rate | 40% |
The inheritance exemption has remained unchanged since April 6, 2009.
In addition, the City of London has its own unique set of local bylaws and regulations governing specific aspects of its functioning. These bylaws are enacted and enforced by the City of London Corporation to address local matters. The Square Mile has the power to create and enforce these local laws within its jurisdiction. These may cover a wide range of areas, including planning and development control, environmental regulations, licensing, and other matters relevant to its local governance.
Perceived Tax Advantages of the City of London
Even though the City of London does not have a distinct tax system, it is often seen as a tax haven. This is because of its historical status as a global financial hub that attracts multinational corporations. The City of London serves as a link in the global network connecting to the UK, with Crown Dependencies including Jersey and British Overseas Territories such as the Cayman Islands and the British Virgin Islands relying heavily on it for their operations. These ‘overseas’ jurisdictions depend on the City’s reputation for stability and its regulatory environment to conduct their business.
Enduring Legacy of the City of London
The City of London Corporation, steeped in a rich history, is a resilient symbol of global financial power. From the British East India Company to today’s cutting-edge financial services, the City has shaped the trajectory of finance. Its commitment to longstanding traditions ensures that the City of London remains a relevant symbol of resilience today.
To gain a deeper understanding of the City of London Corporation, I encourage you to explore its official website.
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Cover Image: Detail from World War I recruiting poster featuring John Bull (1915) Wiki Commons
Originally published in June 2023
