UK’s largest listed companies contribute £90 billion in taxes

A new study suggests that the UK’s largest listed companies contributed nearly £90 billion in taxes in the last financial year. However, only around one-third of that amount came as a direct cost to the companies – with the majority actually coming from income tax and employee contributions to national insurance.

The 100 Group represents the views of the finance directors of FTSE 100, and several large UK private companies. According to a new study from PwC, the firms making up the 100 Group directly and indirectly generate tax revenues with are equivalent of 10% of all UK government receipts.

Andy Agg, chair of the 100 Group tax committee, commented on the findings, “With total tax contribution reaching its highest level since the survey began, the report demonstrates the significant contribution to public finances the 100 Group provides. Beyond that, the findings illustrate that large businesses are consistently providing high levels of investment and innovation, during a time of challenging economic conditions and heightened geopolitical uncertainty, that have helped foster economic growth throughout the UK economy. At 10% of total government receipts, the 100 Group total tax contribution underlines the stability the largest UK companies offer to the economy and wider society.”

The Total Tax Contribution (TTC) increased by £8.3bn in 2022/23

Some will argue that that contribution is still less than it might be, though. PwC’s numbers suggest that while the total amount paid by the country’s largest corporations appears to have risen, the picture may be more complicated than that. For example, in 2018, that figure was £84.1 billion, while in 2023, that has risen to £89.8 billion in tax during the 2022/23 financial year. But while that is a larger number, the portion of total receipts which that constitutes has decreased – having stood at 12.3% five years ago, according to PwC’s research.

Further to that, adjusted for inflation – and the last five years have seen a lot of it – £84.1 billion in 2018 would be worth more than £106.2 billion, according to the CPI Inflation Calculator. In reverse meanwhile, £89.8 billion in 2023 would have been worth just over £71 billion in 2018. So as much as much as the group’s members might claim their tax burden is exemplifies a growing centrality to the UK’s public funds, proportionally it the reverse could be argued to be true.

At the same time, the majority of the contribution that the 100 Group takes credit for does not come directly from the profits of its firms. While the companies contributed £29.1 billion in taxes borne – those that are a direct cost to the company such as corporation tax – as part of their headline ‘almost £90 billion’ figure, the larger £60.6 billion portion of that came from taxes collected. This includes levies such as fuel duty and VAT – usually a cost passed on to the consumer – individual income tax and employee national insurance contributions (NICs) deducted under PAYE.

Is tax policy likely to be a significant lever for achieving your net zero target?

That might see a few eyebrows raised at the suggestion that, in the wake of these figures, the UK’s largest corporate players ought to be cut some slack, to encourage them to spend big on the country’s transition to net zero. PwC polled members of the 100 Group, asking about their views on the impact of their net zero targets. An overwhelming majority of 96% heads of tax said they have a net zero target, but 11% expected tax policy to have a high impact on meeting those targets. Following on from this, 68% argued that more generous green incentives should be offered to corporations to hasten the UK in transitioning to net zero.

Summarising those responses, Andy Wiggins, tax partner at PwC, commented, “Businesses will play an important role in the UK’s ability to meet its 2050 net zero target, and transition plans will be a key part of companies’ forward-looking strategies. Many expect their business model to be significantly influenced by the net zero adoption, including a large effect on business investment and research and development. Given the scale of effort required to meet the targets, companies were keen to emphasise the importance of long-term consistency and clarity over net zero policies, alongside incentives in the form of carrots over sticks to ease the transition.”

Given that research by CDP and the Climate Accountability Institute suggests that just 100 corporations account for almost three-quarters of global emissions, and a number of them are among the largest corporate entities in the UK, critics might scoff at the idea they should be incentivised to clear up what is arguably their mess. At the same time, other studies from TaxWatch suggests that the UK misses out on billions in revenue every year due to the way seven of the world's largest tech businesses successfully minimise their tax bills – something which might somewhat undermine the idea such huge operators are hard-done-by enough by the present tax system to need a further handout.