UK’s largest companies support thousands of suppliers while contributing nearly £83bn in tax in 2017

Dec 05, 2017

 

  • 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.”

 

Ends

 

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.

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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