Tax rates hitting UK’s largest companies harder than before
Survey highlights the increasing tax burden of FTSE 100 businesses
Survey highlights the increasing tax burden of FTSE 100 businesses
The total level of tax borne or collected by FTSE 100 businesses has grown
significantly as a proportion of their earnings since 2007, according to a new
survey.
The businesses’ total tax rate increased from an average of 38.2% of total
earnings in 2008 to 41.6% in 2009, reported
The
Hundred Group of FTSE 100 Finance Directors survey, conducted by
PwC. This
represented a year-on-year increase of 9%.
Although corporation tax payments fell 6.4% to £10.3bn, reductions in other
taxes were not in line with declining profitability and therefore accounted for
a higher proportion of overall earnings.
In total the businesses paid or collected (from employees for HMRC) £66.6bn
in taxes during the 2008/2009 tax year, £17.2bn of which was in employment
taxes.
The increasing tax burden has brought to prominence the issue of where
companies locate.
Ashley
Almanza, the chairman of The Hundred Group of Finance Directors,
said:
“The survey reveals that total UK tax contributions are absorbing an
increasing proportion of the value generated by FTSE 100 companies. This
presents a growing challenge for the UK’s largest firms. To be competitive,
companies need to ensure that their capital and investment in people, skills and
innovation are targeted at countries whose business environments and tax systems
are internationally competitive.”
Susan Symons, tax partner at PwC, said: “It is important to ensure that the
real impact of tax on business is properly understood and that the results of
this survey are widely discussed with Government and other stakeholders.”
The Hundred Group is a not-for-profit organisation comprising finance
directors of the UK’s 100 largest public companies. These companies provide
employment to 1.7m people and generate almost 13% of the government’s total tax
receipts. They now pay employment taxes to the exchequer equating to an average
of £17,721 per employee.
Further reading:
Overview:
Almanza into the spotlight at Hundred Group