The UK’s leading businesses are handing over half of the money they generate to the government in taxes, according to a fresh study published today.
FTSE 100 companies gave up 53.2 per cent of their income to the public coffers last year, illuminating the heavy tax burden British businesses are being shackled with.
Over one in every 10 pounds the government collects in taxes is sourced from the UK’s largest companies, new research by accountants PwC has found.
On average, FTSE 100 companies, and other large businesses, had 53.9 per cent of their profits taken away from them through taxes, the highest rate since the financial crisis when the figure climbed to over 64 per cent.
The fresh study reveals the scale of the punitive tax burden being shouldered by the UK’s largest firms.
It comes at a time when concerns are mounting over the UK’s competitiveness as an attractive place to do business following the government’s decision to hike corporation tax and national insurance to 25 per cent and by 1.25 percentage points respectively.
The government’s collective tax decisions since the March 2021 budget will raise the tax burden to its highest level in seven decades.
Experts warned the government is treading a fine line between asking businesses to foot a high tax bill to repair the damage inflicted on the public finances by the Covid-19 crisis and ensuring firms are not suffocated.
“The goal will be balancing the need of closing the government spending deficit created by the Covid-19 crisis while ensuring businesses continue to invest and evolve to sustain economic growth,” said Andrew Packman, tax partner at PwC.
In total, Britain’s largest businesses generated over £77bn last year for the government’s warchest.
Corporation tax represented the greatest share of direct taxes on businesses at 27 per cent. This proportion is set to rise after the tax’s rate increases to 25 per cent in April 2023.