Tax burden rises for top 100 companies

The tax burden of the UK’s biggest companies has grown significantly as a proportion of total corporate earnings since 2007, according to the Hundred Group.

The not-for-profit body, which represents FTSE 100 finance directors, claims its members’ total taxes borne increased from an average of 38.2% of total earnings in 2008, to 41.6% in 2009: a year-on-year increase of 9%.

The figures come from the results of a survey conducted on the Hundred Group’s behalf by PricewaterhouseCoopers. It shows that the country’s largest companies paid or collected £66.6 billion in taxes during 2008/09, during which time corporation tax payments fell 6.4% to £10.3 billion – but other levies did not reduce in line with declining profitability and therefore accounted for a higher proportion of overall earnings.

The survey also suggests that banks remain significant contributors to UK total taxation revenues, despite turmoil in the global financial services sector. Bank corporation tax receipts fell by 77% during 2008/09, in line with sharp falls in profits, but other tax burdens increased by 11%.

The oil-and-gas industry made the largest  contribution to the Exchequer: total taxes borne increased by 67%, including an 81% increase in corporation tax.

Other findings of the Hundred Group poll show that FTSE 100 companies employ 5.8% of the total UK workforce and pay £17.2bn in employment taxes borne and collected. Employer NI contributions equate to 21.4% of taxes borne and represent the second-highest tax cost for the survey participants, after corporation tax.

Hundred Group chairman Ashley Almanza said, ‘Total UK tax contributions are absorbing an increasing proportion of the value generated by FTSE 100 companies. This presents a growing challenge for the UK’s largest firms.

‘To be competitive, companies need to ensure that their capital and investment in people, skills and innovation are targeted at countries whose business environments and tax systems are internationally competitive.’

Issue Extract

100_group_survey_09.pdf

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