The PricewaterhouseCoopers (PwC) survey of the 100 Group – a group of FTSE100 firms and other large companies – released today showed increases in revenues coming from taxes that had been cut.
In the year to April, corporation tax receipts dipped by 7.4 per cent, but this was largely due to lower receipts from the North Sea oil companies. A combination of lower oil prices, high operating costs and raised capital investment in the 2014 survey have reduced their tax payments.
Stripping out the oil and gas firms, corporation tax payments climbed by 6.7 per cent.
Corporation tax has been cut to 21 per cent from 28 per cent in 2010 and is set to fall to 20 per cent in April.
“The total amount that the government is taking from the largest companies has increased, making the point that if you have a stable and competitive tax system that encourages activity and investment... that feeds through in higher tax receipts,” Andrew Packman, tax partner at PwC, told City A.M.
National insurance contributions have also risen despite the tax-free allowance being raised to £12,500.
“The tax per employee is down £51 on last year to £11,214, which may reflect the higher personal allowance threshold affecting firms with a greater proportion of lower paid workers, such as retail companies,” said Kevin Nicholson, head of tax at PwC. “However, the overall employment tax generated by big firms has increased, as they employed more people.”
The PwC report also shows a great deal of change over the last decade in the taxes payed by large companies. In 2005 about half of all the tax borne by companies was accounted for by corporation tax – about a one to one ratio.
However, in 2014 for every £1 paid in corporation tax £3.27 was paid in other taxes such as business rates and irrecoverable VAT.
Contributions from business rates have increased by 78 per cent since 2005, driven mainly by increasing rateable property values and growth in the retail sector.
Irrecoverable VAT revenue has more than doubled, driven largely by an increase in rate of VAT to 20 per cent in 2011. Employers’ NIC increased by 47 per cent as a result of increased rates in 2011 and increasing employee numbers and wages.