The overall tax contribution of the UK’s largest companies in 2014 is the highest level ever recorded, according to a decade-long study conducted by PwC, who found that taxes borne and collected by The 100 Group companies totalled £80bn in 2014, up £2bn on last year, and surpassing any year since the study began.
The £2bn increase has been driven mainly by higher employment and wages. Employee numbers rose by 1.2% to more than two million and their wages by 4.3% to average £31.9k, increasing income taxes generated. Aside from employment, the companies spent £29bn on capital investment and £8bn on research and development in 2014. Greater VAT on sales has also played a role in the record tax contribution, partly reflecting higher turnover in some firms.
Taxes borne by businesses themselves have increased 0.1% on last year, despite the rate of corporation tax falling from 24% to 23%. PwC reports that for every £1 of corporation tax paid, 100 group firms now bear £3.27 in other taxes such as employers’ NIC and business rates. The ratio was equal when the survey began in 2005; last year it was 1:2.86.
While corporation tax payments have declined 7.4% (£0.5bn) on last year, this was driven largely by lower tax receipts from the North Sea companies. A combination of lower oil prices, high operating costs and high capital investment in the 2014 survey have reduced their tax payments. Stripping out oil & gas companies, corporation tax increased by 6.7% and other business taxes borne increased by 6.2%.
Meanwhile, a separate PwC study, Paying Taxes, which was commissioned jointly with the World Bank and the IFC, showed that after two years of ascent the UK dropped two places to 16th on the annual benchmark of business tax systems, which measures the tax costs and compliance burden for a case-study manufacturer. Andrew Packman, tax partner at PwC, commented: ‘UK businesses are unlikely to think their tax compliance burden is light, but when you look around the world it’s clear things could be a lot worse. [The] UK has to work harder at retaining and attracting business than countries with specific resources, and it is much more than having a competitive tax rate. Making paying taxes simpler is equally important.’
The overall tax contribution of the UK’s largest companies in 2014 is the highest level ever recorded, according to a decade-long study conducted by PwC, who found that taxes borne and collected by The 100 Group companies totalled £80bn in 2014, up £2bn on last year, and surpassing any year since the study began.
The £2bn increase has been driven mainly by higher employment and wages. Employee numbers rose by 1.2% to more than two million and their wages by 4.3% to average £31.9k, increasing income taxes generated. Aside from employment, the companies spent £29bn on capital investment and £8bn on research and development in 2014. Greater VAT on sales has also played a role in the record tax contribution, partly reflecting higher turnover in some firms.
Taxes borne by businesses themselves have increased 0.1% on last year, despite the rate of corporation tax falling from 24% to 23%. PwC reports that for every £1 of corporation tax paid, 100 group firms now bear £3.27 in other taxes such as employers’ NIC and business rates. The ratio was equal when the survey began in 2005; last year it was 1:2.86.
While corporation tax payments have declined 7.4% (£0.5bn) on last year, this was driven largely by lower tax receipts from the North Sea companies. A combination of lower oil prices, high operating costs and high capital investment in the 2014 survey have reduced their tax payments. Stripping out oil & gas companies, corporation tax increased by 6.7% and other business taxes borne increased by 6.2%.
Meanwhile, a separate PwC study, Paying Taxes, which was commissioned jointly with the World Bank and the IFC, showed that after two years of ascent the UK dropped two places to 16th on the annual benchmark of business tax systems, which measures the tax costs and compliance burden for a case-study manufacturer. Andrew Packman, tax partner at PwC, commented: ‘UK businesses are unlikely to think their tax compliance burden is light, but when you look around the world it’s clear things could be a lot worse. [The] UK has to work harder at retaining and attracting business than countries with specific resources, and it is much more than having a competitive tax rate. Making paying taxes simpler is equally important.’
