Financial services sector is a “golden goose” for tax revenue as top UK firms contribute £82.3bn
The tax contribution of the largest UK companies to the economy is now £82.3bn, according to a study published today.
A survey of the total tax contribution of the 100 Group shows that the amount either paid or generated by the biggest UK firms has gone up by 2.2 per cent from last year’s total of £80.5bn.
The financial services sector was the biggest contributor, accounting for 43 per cent of the 100 Group’s total taxes borne. Revenue from the increased bank levy rate was up 24.4 per cent.
Kevin Nicholson, head of tax at PwC, said that the survey’s findings were a timely reminder of the value the value of the financial services sector. “With Brexit and continued regulation creating uncertainty, Government will be mindful of strangling a golden goose.”
The 100 Group represents the views of finance directors from the FTSE 100 as well as several large private companies and some UK operations of multinational groups. Between them, the firms employ 2.1m people.
The results showed that members of the 100 Group account for 13.3 per cent of total government tax receipts. This includes 23.7bn in taxes borne, an increase of 3.6 per cent from 2015, and £58.6bn in generated tax revenue.
Over half of the value distributed by the 100 Group went to the government in taxes, while employees received 31.8 per cent in wages and 5.7 per cent went towards financing. The rest was either paid out to shareholders or reinvested.
But the oil and gas industry went against the trend. Its tax payments have declined due to falling oil prices.
Employers’ NIC and business rates were the most significant tax costs for companies.
The third highest cost was corporation tax, even though the statutory rate is at its lowest since the survey began 12 years ago. This is due to the withdrawal of available reliefs.
In addition to taxes, the corporations also supported the economy through £25.9bn of fixed assets, which accounts for 14.5 per cent of UK business investment. A further £8bn was put into research and development.
Andrew Bonfield, chair of the 100 Group, pointed out that those in the collective “also supported the activities and employment of many smaller companies in their supply chains.”
He added: “100 Group companies will continue to work hard to ensure the UK remains a competitive place to do business so we can create more jobs and play our part in contributing to future growth.”