UK businesses’ tax burden rises despite chancellor George Osborne’s Osborne’s cuts to corporation tax
Britain's biggest businesses paid £80.5bn in taxes this year, up from £80bn in 2014, with a string of new measures expected to batter firms still in the pipeline.
Figures from accountancy giant PwC – based on a survey of FTSE 100 finance directors, large private companies and multinationals – show that the total tax rate, a measure of tax compared to profit, is now at 42.9 per cent, up from 41.4 per cent last year and up from 38.2 per cent in 2008. This is despite chancellor George Osborne’s cuts to corporation tax.
According to PwC's tax contribution survey, there is a significant shift in the way businesses in the UK are taxed. For every £1 of corporation tax, businesses now bear £4.46 in other taxes. Business rates have also overtaken corporation tax for the first time to become the second largest tax borne by large companies. They make up 21 per cent of the biggest companies’ tax bills, compared to corporation tax which amounts to 18.3 per cent.
This has been a boon for the leaner services sector. However, it signals tough times for retail businesses, which tend to employ large numbers of people and have more properties.
The figures come after a number of Treasury polices aimed at raising cash from British businesess, such as the apprenticeship levy. The Living Wage is also expected to hit businesses.
Seamus Nevin, head of employment and skills Policy at the Institute of Directors, said: “The Chancellor’s £1bn living wage is not the only extra cost businesses have been hit with. A new payroll tax, in the form of the apprenticeship levy, will cost employers £12bn over the course of the parliament, while the next tranche of pensions auto-enrolment will affect the very smallest businesses.
“This is not to mention a number of significant additional reporting requirements firms will have to comply with. The cumulative effect of these will be considerable, particularly for those medium-sized businesses that just meet the threshold for compliance.”