Friday 22 January 2021 12:48 pm

Netflix pays £3.2m in UK corporation tax as it ramps up British-made shows

Netflix paid just £3.2m in UK corporation tax in 2019, but said it was ramping up its investment in British shows such as Sex Education and The Crown.

Netflix’s UK divisions posted revenue of £120m for the year and pre-tax profit of £13m, according to Companies House filings.

While the £3.2m tax bill is the company’s highest to date, critics have argued that the Silicon Valley tech giant should be coughing up far more to the taxman.

Netflix has an estimated 13m subscribers in the UK and its true revenue from the country is thought to be roughly £940m, according to Ampere Analysis.

However, the firm books most of its UK revenue in the Netherlands — a practice common among major tech firms.

The company also received more than €250,000 (£222,000) in tax rebates in 2018 and 2019 as part of a government scheme to incentivise film and TV production.

Netflix has said that it will start declaring its true UK revenue this year, which should lead to a significant increase in its tax bill.

To date, the company’s UK activity has largely been investment in content, meaning it only pays tax on profit, not revenue.

In response to criticism over its low tax bills, Netflix said it doubled its investment in UK content to $1bn (£730m) last year as it splurged on major titles such as The Crown, The Witcher and Sex Education.

The UK accounts for a third of the streamer’s productions in Europe, with over 50 shows including tie-ups such as The Serpent, a co-production with the BBC.

“We pay all taxes required and are committed to playing an active role in supporting British production and creative talent for the long term,” a Netflix spokesperson said.

Netflix has expanded its presence in the UK in recent years, growing its workforce from just 29 people in 2018 to more than 260 last year.

The company has also announced plans to establish new London headquarters, tripling its office space in the capital.

Netflix enjoyed a record year in 2020, growing its global subscriber base to more than 200m amid increased demand for home entertainment during the pandemic.