100 largest UK companies contribute 12% of all government tax receipts
A survey conducted by PwC on behalf of The Hundred Group of Finance Directors shows that Britain's largest companies contributed £56.8 billion (or 11.9% of all government tax receipts) in the year to 31 March 2010.
Survey results show that they continue to bear and collect substantial amounts of both corporation tax and other UK taxes despite falling commodity prices and lower profitability generally as a result of the challenging economic environment.
Major employers
The Hundred Group members continue to be major employers, providing jobs for over 6% of the UK workforce, and generating total employment taxes of £16.7 billion.
Corporation tax is still the largest tax borne by these companies but the survey results show that for the year to 31 March 2010, for every pound paid in corporation tax, Hundred Group members paid £1.97 in other taxes borne and £6.79 in taxes collected.
Ashley Almanza, vice chairman of the Hundred Group of Finance Directors, representing the UK's largest companies, said: "These results show the substantial contribution that member companies of The Hundred Group continue to make to the UK economy. Over the last three years the world has experienced extraordinary financial and economic upheaval and, as the UK seeks to re-establish strong economic growth, it is vital that the UK Government and business work together to continue to create investment and employment opportunities. It is crucial that the tax system in the UK is predictable and internationally competitive."
Susan Symons, leader of the Total Tax Contribution team at PwC, said: "We have been collecting this data for six years and the continued high participation in the survey clearly demonstrates the value in the results which ensure that the impact of the tax system is properly understood. The figures highlight the significant contribution made by large companies to the public finances in spite of the difficult economic environment.
"And we can expect next year's survey to show these contributions increasing again as corporate profitability returns, oil prices recover, the VAT rate increases work through and new taxes are introduced."
Other findings include:
- Hundred Group members paid £5.9 billion in corporation tax - 16.7% of all corporation tax receipts, and a further £11.6 billion in other taxes.
- After corporation tax (33.7%), the largest taxes borne were employers' National Insurance Contributions (NICs) (27.4%) and local business rates (20.3%).
- For taxes collected, the largest amounts were employee NICs and income tax deductions under PAYE (32.6%), fuel excise duty (32.5%) and VAT (18.2%).
- As in previous years, four industry sectors made a major contribution. Together the oil and gas companies, retailers, banks and insurance companies paid 66% of taxes borne and 69% of taxes collected.
- Five years ago, the 2006 survey found that for every pound that Hundred Group members paid in corporation tax, 92 pence was paid in other taxes borne and £3.70 in taxes collected. For the year to 31 March 2010, for every pound paid in corporation tax, Hundred Group members paid £1.97 in other taxes borne and £6.79 in taxes collected.
- The average salary paid by Hundred Group members in 2010 was £46 550, considerably more than the UK national average wage in the same period of £25,900.
- Primarily reflecting a drop in corporation tax due to lower profitability and lower petroleum revenue tax from falling commodity prices, total taxes borne have fallen by a quarter in the 2010 survey compared with last year. Irrecoverable VAT also fell due to the Government's temporary VAT rate reduction to 15%. Total taxes borne and VAT are expected to rise again in 2011 as corporate profitability returns, oil prices have risen, the VAT rate has increased and new taxes have been introduced.
- Taxes collected have been more stable, falling only 1.9%. A total of £39.3 billion of taxes was collected on behalf of the Government.
The findings are from the sixth annual Total Tax Survey, carried out by PwC on behalf of The Hundred Group of Finance Directors. This year's survey had a record number of respondents, with 80% of those approached taking part.
About The Hundred Group of Finance Directors
The Hundred Group is a non-political, not-for-profit organisation. It aims to contribute positively to the development of UK and international policy and practice on matters that affect how businesses are run, for example, taxation, financial reporting, corporate governance and capital market regulation. Recently The Hundred Group has been particularly focused on UK taxation, its complexity and its impact on competitiveness. Its membership includes the finance directors of the 100 largest public companies in the UK.
Total tax survey
Total Tax Contribution Framework
The survey was carried out using the PwC Total Tax Contribution (TTC) methodology. This makes a distinction between taxes borne (paid) 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 not a real cost to the company apart from the cost of collecting them. Here, the company is collecting taxes on behalf of government from others, for example, income tax under PAYE and NICs from employees, general VAT and excise duties.
Methodology
The PwC TTC Framework provides a standardised methodology and a common language for companies to measure and communicate the taxes they pay. It provides a measure of what companies pay into public finances and contains data over and above the normal tax disclosures in companies' financial statements.
The survey was conducted in 2010 and respondents comprised 84 out of the 105 corporate members of the Hundred Group. Data was gathered for accounting periods ending in the year to 31 March 2010. It covered 22 business taxes in the UK which are either borne or collected by this group of companies.
*Exchange rate: £1 = R11.18