Why corporation tax isn’t all there is to it

December 09, 2019

by Marissa Thomas Head of Tax, PwC United Kingdom

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As we approach the election, business taxes (corporation tax in particular) are once again a topic of much debate. So it’s timely that we’ve just released the findings of the 2019 Total Tax Contribution (TTC) of the 100 Group survey, which looks in detail at the business taxes borne (that’s those paid directly) and collected by the UK’s largest companies, and how this contributes to the UK economy.

There’s no doubt that corporation tax is important, but it’s not the only business tax: in 2019 there were 22 business taxes borne by the 100 Group (broadly the FTSE100). And while it’s true that corporation tax amounts have fallen over time, in the aftermath of the financial crisis and with falling statutory rates, total taxes borne have increased from £19bn in 2005 to £26bn today.

Our latest TTC figures show that corporation tax now makes up just a quarter of business taxes borne, and in 2019, for every £1 of corporation tax paid, a further £3.05 was paid in other business taxes. It is important to appreciate the connection between other business taxes and corporation tax. Other business taxes are charged before arriving at profit so as they increase, for example due to fiscal policy changes, profits on which corporation tax is due will decrease. An understanding of the full picture of all taxes paid is key.

The 100 Group companies include many familiar, high street businesses used by the public every day: from the groceries and pharmaceuticals we consume, to the banks that hold our money and the travel and leisure groups that help us spend it. Collectively, these businesses employ more than two million people, 6.1% of the total UK workforce. Taxes collected on behalf of government, including income tax collected from those employees, contribute a further £58.7bn to public coffers. Additionally, last year, during a period of falling business investment in the wider UK economy, the 100 Group increased their capital investment by nearly 10% from the previous year - reaching £26.8bn. They also invested £9.3bn in research and development.

Fifteen years ago, the idea of publishing tax data outside what was required in the annual report accounts, was rare. Today, companies tell us that they use total tax contribution data in a number of ways. More and more, 100 Group members tell us they are using their tax contribution data to talk to shareholders, staff, government and the public. This willingness to engage with these audiences will help open the door to greater understanding of the role big businesses play in the UK, which will in turn encourage increased involvement and impact. Do you know what your company’s total tax contribution is?

Our 15th Total Tax Contribution of the 100 Group report was published on 27 November 2019. The Right Hon Lord Gavin Barwell joined around 80 members of the 100 Group and our clients at the breakfast launch of our TTC report for a panel discussion on the findings and how they fit into the current economic climate. This blog draws on discussions at that event.

Read 15 years of total tax contribution for more on how total tax contributions have changed. If you’d like to learn more about tax transparency or any of the other tax areas discussed above, please get in touch.

by Marissa Thomas Head of Tax, PwC United Kingdom

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