Total Tax Contribution of 100 Group increases for seventh consecutive year
Taxes borne up 6.3% to £25.3bn, including a 33% increase in UK corporation tax payments to £6.4bn
Total UK based research and development spend jumps 7.7% to over £9bn
The contribution of the UK’s largest companies to the country’s economy has been underlined by a report published today which shows that the 100 Group has contributed £82.9bn in taxes while each supporting an average of 6,800 UK suppliers, a substantial proportion of which are SMEs.
The 2017 Total Tax Contribution for the 100 Group, showed 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, while taxes collected – those where the company acts as a collection agent for the government - decreased by 1.4% to £57.6bn.
The report estimates that the 100 Group employed 2.1m people in the UK in the 2017 financial year - 6.5% of the UK workforce. On average, they contributed employment taxes of more than £12,000 per worker. For every £1 of corporation tax paid by the 100 Group, another £2.91 was paid in other taxes borne. At 30.6%, employment taxes remained the largest element of the total tax contribution.
Analysis shows that the 100 Group companies spent £9.2bn on research and development (R&D), a 7.7% increase on the previous year. Capital investment expenditure was £26.6bn, up 1.7% on 2016.
For the first time, the study calculated gross value added - a measure of the value of goods and services produced - which was estimated at £66,000 per every 100 Group employee. This compares to an average of £55,000 per employee in the wider economy.
Chris O’Shea, Chair of the 100 Group Tax Committee, said:
“This report illustrates the important role the 100 Group plays in supporting the UK economy. With 2.1 million employees in the UK, in this past year we have invested almost £100m every day of the year in a combination of capital expenditure and R&D, essential building blocks to strengthen the UK as we move into the fourth industrial revolution.
“At a time when it’s important to build public confidence in the tax system, we are very happy to continue to demonstrate our members’ substantial economic contribution to the UK, not just in terms of taxes paid to the Exchequer, but also broader economic and employment benefits.”
The rise in taxes borne was largely driven by a 33% increase in corporation tax receipts and a 4.4% uptick in employer’s National Insurance contributions. Between them, banks (3.2) and retailers (1.6) accounted for 4.8 percentage points - just over three quarters - of the 6.3% increase in taxes borne. The total corporation tax increase was due to a number of 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 1.4% decrease in taxes collected was attributed to falls in net VAT, tobacco duty and tax deducted at source, where a change in the law sees banks no longer required to deduct tax from payments of interest.
Kevin Nicholson, PwC head of tax, said:
“The country’s largest companies support many smaller ones, and continue to make a sustained contribution that goes beyond the payment of corporation tax. With the corporation tax rate set to fall, it’s this wider contribution to other taxes and the broader economy that Government is banking on.
“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.”
Notes to editors:
The survey was carried out using the PwC 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. Taxes collected are those generated and administered by firms such as income tax deducted under PAYE and NICs from employees, general VAT and excise duties.
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 2017 and respondents comprised 100 companies in the 100 Group. Data was gathered for accounting periods ending in the year to 31 March 2017.
The report uses the data provided by participating companies which is extrapolated to represent the full membership for 2016 and 2017.
About the 100 Group of Finance Directors
The 100 Group represents the views of the finance directors of FTSE 100, several large UK private companies and some UK operations of multinational groups. Our member companies represent the vast majority of the market capitalisation of the FTSE 100, collectively employing over 6.5% of the UK workforce, and in 2017 paid, or generated, taxes equivalent to over 12.6% of total UK Government receipts. Our overall aim is to promote the competitiveness of the UK for UK businesses, particularly in the areas of tax, reporting, pensions, regulation, capital markets and corporate governance.
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