The contribution made by big businesses to the UK public finances – in taxes and more
22 December 2016
For several years now, the amount of tax paid by big companies has come under enhanced public scrutiny and debate with some companies’ tax affairs being the subject of media and Government attention.
In March this year, I joined PwC UK on secondment from the Uganda office and for the past few months, I have had the opportunity to work on a very interesting project, the 100 Group Total Tax Contribution (TTC) survey. This survey looks at the total tax and wider economic contribution that UK’s biggest businesses, broadly FTSE 100 companies, large UK private companies and UK multinational groups make to UK public finances.
Looking at the survey results, I would say that I was stunned by the numbers – I think the contribution these companies make through the taxes that they pay, the jobs they create as well as their investment in capital expenditure and R&D is considerable.
This year, the 100 Group companies paid a total of £82.3 billion up from £80.5 billion last year. This represents 13.3% of the total government tax receipts. I think this reflects the importance of these companies to the UK Exchequer. Over half (51%) of the value distributed by these companies goes to government in taxes! Employees are the second largest beneficiary receiving 32% in salaries and wages.
This survey also recognises the fact that the contribution made by companies goes beyond tax. Over the last five years, these companies have spent £130 billion on capital investment and £33 billion on R&D. This year, the 100 Group employed 2.1 million people, representing 6.6% of the total UK workforce. These are highly skilled, well paid workers with an average salary exceeding the national average. In addition, the activities of these companies support a wide range of UK suppliers, many of which are SMEs.
In my view, the tax contributions made together with the continued investment and related economic stimulus generated by the activities of these big companies is considerable. Therefore, I believe that it is important to demonstrate companies’ contributions beyond corporation tax and even beyond tax. Studies like this form one of the central elements of transparency; developing meaningful communications to build trust with all stakeholders.
Find out more about the Total Tax Contribution of the 100 Group here.