22 Jan 2013 00:01
- Total Tax Contribution including taxes collected stands at £77.1bn (14.2% of total tax receipts)
- Government’s tax take from Hundred Group coming from broader range of taxes
Britain’s largest companies have continued to make a substantial contribution to the UK Exchequer during the recession with a total tax contribution of £77.1bn in 2012, 14 .2% of total Government receipts. This is stable compared to last year (£77.2bn).
Looking over a longer period, taxes borne by the Hundred Group have increased by 19% since 2005 when the study began. There has also been a dramatic change in the makeup of the taxes paid over this period. For every £1 of corporation tax, businesses now bear £2 in other taxes, almost twice as much as in 2005. A range of other taxes borne now significantly outweigh corporation tax and have driven the 19% increase in tax payments.
Andrew Bonfield, Chairman of the Tax Committee of the Hundred Group, commented:
“These latest results show the continued significant contribution of Hundred Group companies to the UK economy, despite the double dip recession.
The changing composition of taxes on businesses reflects the policy of successive governments looking for stable tax revenues and economic growth. We’re in the middle of a well trailed programme for reducing the rate of corporation tax while other business taxes, such as employer’s national insurance contributions and irrecoverable VAT, have risen. These other taxes tend to be easier to collect and less volatile since they’re not dependent on profits. ”
Mary Monfries, head of tax policy and regulation at PwC, added:
“There’s unprecedented interest in the amount of corporation tax businesses pay. The current debate sometimes confuses compliance with the rules with tax policy itself. Government policy has changed and our study shows the picture of tax paid has changed as businesses comply with the rules.”
Taxes borne by The Hundred Group in 2012 total £24.8bn (£25.5n for 2011). The end of the ‘one-off’ bank pay roll tax and fall in corporation tax was offset to some extent by the bank levy, increases in irrecoverable VAT, employers National Insurance Contributions and business rates. Taxes collected have been relatively stable and total £52.3bn (£51.7bn for 2011).
The study highlights the wider contribution beyond tax made by UK’s biggest businesses to the economy. The Hundred Group provides employment to 2m people, 7% of the UK workforce. Some 15.8% of UK expenditure on capital investment (£19bn) and 14.4% of UK research and development (£2.5bn) was contributed by half of the companies participating in the survey.
Notes to Editors:
About The Hundred Group of Finance Directors
The Hundred Group represents the views of the finance directors of FTSE 100, several large UK private companies and some UK operations of multinational groups. Our member companies represent the vast majority of the market capitalisation of the FTSE 100, collectively employing over 7% of the UK workforce, and in 2012 paid, or generated, taxes equivalent to 14% of total UK Government receipts. Our overall aim is to promote the competitiveness of the UK for UK businesses, particularly in the areas of tax, reporting, pensions, regulation, capital markets and corporate governance.
Total Tax Contribution Framework
The survey was carried out using the PwC Total Tax Contribution (TTC) methodology. This makes a distinction 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, employers' NICs and irrecoverable VAT. Taxes collected are those generated and administered by firms such as income tax under PAYE and NICs from employees, general VAT and excise duties.
The PwC TTC Framework provides a standardised methodology and a common language for companies to measure and communicate the taxes they pay.
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