12 December 2018, The 2018 Total Tax Contribution Report has been published
The UK’s largest companies continue to make a significant contribution to the country’s tax revenues, according to PwC research which finds that the total tax contribution (TTC) of the 100 Group topped £84bn in 2017/18, despite slowing economic growth.
The 2018 total tax contribution of the 100 Group shows that increasing corporation tax payments have driven a £1.9bn rise in taxes borne – those that are a direct cost to a company – to £27.2bn. For every £1 paid in corporation tax, a further £2.77 was paid in other taxes borne. In 2005, the first year the study was undertaken, the ratio stood at 1:1, highlighting the shift from profits taxation to other forms of tax. Analysis indicates the 100 Group contributed a further £56.9bn in taxes collected – those such as VAT and employee PAYE which are generated and administered by businesses.
The study illustrates the broader economic contribution of 100 Group companies, which employ around two million people in the UK, who each contribute an average of £12,855 in tax. When looking at the value distributed by these companies, the largest beneficiary is the government, receiving 45% in taxes. A further 30% goes to the employees in wages, with 25% going to providers of capital.
The average participant company in the study also supports more than 5,000 UK suppliers, including SMEs. 100 Group members spent £25.6bn in total on capital investment in 2017/18 – more than 13% of total UK business investment. Research and development (R&D) spend among survey participants stood at a total of £10.3bn.
Chris O’Shea, Chair of the 100 Group Tax Committee, said:
“At a time of rapid change for UK business, combined with increased political and economic uncertainty, the 100 Group Companies continue to make a significant contribution to the national economy and support local communities up and down the country.
In the past year we contributed over £84bn in tax to the UK government and we are directly responsible for over two million jobs and many more indirectly. Our continued focus on and investment in R&D, totalling some £10.3bn in the past year, will ensure the UK remains competitive and at the forefront of innovation.
We continue to engage with the Government to ensure UK tax policy facilitates further investment by business and serves the needs of the UK economy today and in the future.”
Employment taxes remain the largest element of the total tax contribution, accounting for 30.6%, followed by excise duties at 29.4%.
Notably, the retail and financial services sectors account for approaching 60% of total taxes borne by the 100 Group. When the first study was conducted in 2005 this figure stood at 46%, illustrating how tax policy decisions have shifted the tax burden away from taxing profits towards businesses taxes based on property and employment.