Banks and oil and gas firms are paying the lions share of tax new figures reveal
PUBLISHED: 06:30 30 January 2014 | UPDATED: 12:26 30 January 2014
Banks and oil and gas firms are paying the biggest slice of UK taxes according to the latest figures.
Britain’s biggest businesses have paid more in annual UK taxes for the first time since 2007, despite a 25% slump in corporation tax take.
Figures from PwC reveal the total tax contribution from the so-called 100 Group of companies rose to £77.6 billion in the year to last March, up from £77.1 billion the year before.
Corporation tax was not the largest duty paid by the firms for the first time after the amount dropped from £8 billion to £6 billion, according to PwC’s annual Total Tax & Economic Impact Survey.
It has now been overtaken by national insurance contributions as the biggest tax expense, at 27.5%, as firms employed 1.3% more staff and increased wages.
For every £1 of corporation tax paid, the UK’s big firms now pay £2.86 in other taxes, PwC said.
Corporation tax receipts have been falling in the UK progressively in recent years after the financial crisis hit profits and as the Government has been cutting rates.
Chancellor George Osborne has repeatedly reduced the top rate of corporation tax from the 28pc he inherited in 2010, to current levels of 23pc. From April the tax will fall to 21pc, and will be slashed to 20pc from 2015.
But while almost a third of the fall in last year’s corporate tax take was down to rate cuts, the survey found that by far the bulk came as a result of plunging profits for oil and gas companies as production declined in the North Sea and costs and capital investment increased.
Oil and gas firms, together with banking groups, pay the biggest chunk of tax in the UK - at nearly half of the total contribution.
But this dropped on a year earlier as the proportion paid by retailers, insurers and telecoms firms increased.
Robin Freestone, chairman of the 100 Group, said: “Government’s rebalancing of business taxes away from corporation tax appears to have played a role in helping to incentivise increased levels of UK employment, as well as investment and research and development.
“These are now helping to stimulate UK economic activity and growth.”
Kevin Nicholson, head of tax at PwC, added that the shift away from corporation tax means the Government is now less dependent on profit-related tax.
“This creates a more stable tax base. Measures like the lowering of the corporation tax rate and additional incentives for innovation are about attracting more investment to the UK, and we are seeing signs that this is paying off,” he said.
But the amount of UK corporation tax paid by multinational corporations has been a controversial issue in recent years, with the likes of Google, Starbucks and Amazon under fire for reducing their bills to negligible levels.
But business body the CBI said the survey showed “the vast majority of businesses pays, and wants to pay, the right amount of tax”.
Katja Hall, CBI chief policy director, said:”This survey shows that the tax contribution of the FTSE 100 has remained constant, contributing 14% of government receipts, despite a cut in corporation tax.”
The 100 Group of finance directors represents the vast majority of firms in the FTSE 100 Index, but also several large private UK companies and some UK operations of multinational groups.
Together they employ more than 7pc of the UK workforce.