How Much Tax Are Companies Really Paying?
Byline: Christopher Williams Tax Senior Manager
FOLLOWING yesterday's Budget few simplification measures have been introduced for UK companies. In fact the complexity of the UK business tax system in relation to the taxes borne by UK companies largely remains.
Of the total taxes borne by participants in a recent PricewaterhouseCoopers LLP survey of the largest UK companies, the amount of corporation tax paid by them has increased 50.4% between 2004 and 2007 and 18.2% between 2006 and 2007.
Employers' NIC, business rates, irrecoverable VAT and petroleum revenue tax continue to be the most significant other business taxes borne by UK companies with total taxes borne increasing by 35.4% from 2004 to 2007 and 10.8% from 2006 to 2007. For every pounds 1 of corporation tax borne by a UK company it pays a further pounds 0.79 in additional taxes.
In addition to being taxpayers, UK companies remain collectors of taxes on behalf of government, for example collecting income tax under PAYE from employees, and excise duties.
Taxes collected are 1.8 times taxes borne, with the largest taxes collected being excise duties. For every pounds 1 of corporation tax paid by a UK company it collects pounds 3.27 in taxes.
In relation to their wider economic contribution, almost half of the value created by UK companies is paid to the UK public finances in tax - compare this to one fifth of the value created being paid out in wages and salaries, 3% paid in interest to debt holders and 32% being available for reinvestment or for distribution to shareholders. …