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Tax contribution of UK top 100 heads upwards

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The total tax contribution of the UK’s top 100 companies was almost £85bn in 2019, making up nearly 12% of UK government receipts, according to a report by PwC.

PwC’s 2019 Total tax contribution survey for the 100 Group, which represents the views of FTSE 100 finance directors, shows the total tax burden of 100 Group companies at 41.3% as a proportion of their commercial profits. This is a 2.6% increase over the previous year, despite a fall in overall profits.

This increase reflects a shift from taxes on profits to taxes on employment and property, which have been sustained or increased as profits have fallen. The largest share of taxes borne is NICs (27%), followed by corporation tax (24.3%). Next come business rates (19.1%) and irrecoverable VAT (15%).

The report showed the government receiving the largest chunk of the value distributed by this group of companies, with 47.7% going in taxes, while wages and salaries paid to employees accounted for 30.1%. The 100 Group employs an estimated two million people in the UK, or 6.1% of the total workforce.

Despite falling business investment in the UK economy overall, capital investment by 100 group companies reached £26.8bn, an increase of 9.6% on the previous year.

The survey uses PwC’s total tax contribution (TTC) methodology, which distinguishes between taxes borne and taxes collected on behalf of the government. Taxes borne are the company’s immediate cost and will impact their results, such as business rates, corporation tax, employer’s NICs and irrecoverable VAT. These amounted to £26bn in 2019. Taxes collected are those generated and administered by businesses, such as PAYE and employee’s NICs, general VAT and excise duties, which amounted to £58.7bn in 2019.

The report also demonstrates the changing profile of taxes, with business taxes other than corporation tax now accounting for nearly 76% of total taxes borne, compared to 50% in the first of these studies carried out 15 years ago.

Chairman of the 100 Group tax committee, Chris O’Shea, said: ‘The report’s findings demonstrate the pivotal position large companies have in driving the UK economy and the significant change in the landscape of UK taxes since the total tax contribution report was first published. As part of this, it is important that the UK’s largest companies continue to pay their fair share of tax and we hope that this report will help bring transparency to the current debate’.

Issue: 1467
Categories: News