By Rob Starr, Content Manager, Big4.com
Mary Monfries, head of tax policy and regulation at PwC comments on the fact that 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.
“There’s unprecedented interest in the amount of corporation tax businesses pay,” she said on behalf of PwC . “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.”
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 according to PwC. 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.
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.
The survey was carried out using the 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.