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Corporation tax payments from the UK’s biggest companies rose by 33% in 2017, according to research by PwC.
Corporation tax payments from the UK’s biggest companies rose by 33% in 2017 to £6.39bn, according to research by PwC with the 100 Group, which includes most of the FTSE 100, several large private firms and some UK operations of multinational groups. This increase is attributed to several factors including the introduction of the bank surcharge from January 2016, loss relief and compensation payment restrictions affecting the banks and increasing profitability within the 100 Group.
The research shows that taxes borne – those that are a direct cost to the company – increased by 6.3% to £25.3bn compared to the previous 12 months. Taxes collected – those where the company acts as a collection agent for the government – decreased by 1.4% to £57.6bn.
The rise in taxes borne was largely driven by the 33% increase in corporation tax receipts and a 4.4% increase in employers' National Insurance contributions (£25.7bn). The report estimates that the 100 Group employed 2.1 million people in the UK in the 2017 financial year - 6.5% of the UK workforce.
The companies spent £9.2bn on research and development, a 7.7% increase on the previous year. Capital investment expenditure was £26.6bn, up 1.7% on 2016.
Kevin Nicholson, PwC head of tax, said: ‘Clarity and certainty on future tax policy will be crucial - 83% of 100 Group heads of tax who responded to our survey prioritised certainty on tax above all else. Ensuring that they are able to continue operating in an environment that allows them to carry on prospering post-Brexit will be paramount.’
Annie Gascoyne, CBI head of economic policy, said: ‘It is welcome news that the 100 Group is making record tax contributions to the UK economy. Recent CBI analysis also shows that, overall, British firms are filing a record tax receipts at 30% of the total UK tax take - demonstrating the importance of having a competitive corporate tax environment.
‘With the UK benefiting from the lowest rate of corporation tax in the G20, this is helping to attract and retain business in the UK and deliver more tax revenue.
‘But while the UK remains a leading global business hub, this position cannot be taken for granted. Firms will be looking for continued stability and certainty from UK policymakers on tax policy, as we negotiate our new relationship with the EU. More immediately, all companies need the certainty of a transition deal between the UK and the EU agreed by the end of the year to avoid a “cliff edge” and to protect jobs and investment.’
The PwC report, 2017 Total Tax Contribution survey for the 100 Group, is available at tinyurl.com/ycqad523.
