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UK's Largest Taxpayers' Contribution Grew In 2016

by Amanda Banks,, London

16 December 2016

The UK's largest companies paid a total of GBP82.3bn (USD103.2bn) in tax this year, compared with GBP80.5bn in 2015, despite a cut to the corporate tax rate, according to a report from PwC.

Tax contributions from the 100 biggest companies in the UK accounted for 13.3 percent of government receipts and comprised GBP23.7bn in taxes borne entirely by the companies and GBP58.6bn in taxes that these businesses have collected on behalf of the Government, such as VAT, and tax they have generated in 2016.

Taxes borne increased 3.6 percent from 2015, driven by increased corporation tax payments. PwC said that while corporation tax is at its lowest level since its survey began 12 years ago, the removal of banks' ability to offset their losses or compensation payments for tax purposes has led to an increase in the amount of corporation tax being raised.

"Cutting the rate of corporation tax doesn't necessarily equate to lower tax bills, as the reliefs available are also being withdrawn," said Kevin Nicholson, Head of Tax at PwC. "This broadening of the tax base means large companies are paying more corporation tax overall. But corporation tax remains a relatively small part of business' tax costs and is likely to stay that way as the rate continues to come down."

Revenues from the bank levy rose 24.4 percent in 2016 after a rate increase.

The Total Tax Rate – a measure of the total tax cost compared to profit – over the period was 46.4 percent, compared with 42.9 percent in 2015 and 38.2 percent in 2008.

The tax contribution from financial services companies has increased over the past six years, with the sector now accounting for 43 percent of taxes borne by the 100 group.

Meanwhile, the contribution from the oil and gas industry has declined, largely due to the fall in oil prices.

"The findings are a timely reminder of the value of the financial services sector to the public purse," said Nicholson. "With Brexit and continued regulation creating uncertainty, Government will be mindful of strangling a golden goose."

TAGS: tax | business | accounting | financial services | corporation tax | United Kingdom | oil and gas | regulation | services | Tax

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