Large businesses' contribution to UK tax reaches £80 billion
18 December 2014
The Treasury netted £2 billion more from these companies in the last tax year than in 2012/13. The notable rise was apparently due to a 1.2% increase in employment levels and a 4.3% increase in wages.
PWCs ‘Paying Taxes’ survey also shows a decrease in the global average total tax rate from 53% in 2004 to 42% in 2013. These figures imply that globally, cuts in profit taxes have reached a slight plateau since 2010, while in the UK the rate has been cut from 28% to 21% since 2010.
This data points towards supporting the government’s claim that its policy of reducing corporation tax to make the UK attractive for businesses seems to be paying off. The head of tax at PWC, Kevin Nicholson, did warn, however, that the government (and successive governments) will need to keep an eye on the impact on different industries as other taxes become more significant, because the changing composition of tax costs will affect some industries disproportionately. He also noted that two-thirds of CEOs surveyed around the world say the international tax system is in urgent need of reform.
This record contribution is good news for the Treasury, the British economy and the workforce as a whole. However, there is still some way to go given the Chancellor’s Autumn Statement speech.