UK’s biggest companies increase 2021/22 total tax contribution to £81.5bn

UK’s biggest companies increase 2021/22 total tax contribution to £81.5bn

Andy Agg

The UK’s largest listed companies generated £81.5 billion in tax during the 2021/22 financial year despite lockdowns and ongoing social distancing measures throughout much of 2021, according to a new study.

The 18th annual Total Tax Contribution of the 100 Group, produced by PwC, estimates the companies contributed £26bn in taxes borne - those that are a direct cost to the company - and a further £55.5bn in taxes collected, such as income tax and employee National Insurance Contributions (NICs) deducted under PAYE, for the year ended 31 March 2022.

The survey has been compiled from data provided by 95 of the largest listed companies in the UK, coinciding with the second year of the pandemic, and has been extrapolated to estimate the overall contribution of the 100 Group as a whole.

The survey period includes the emergence from UK-wide lockdown in early 2021 and continued social distancing and remote working policies throughout much of the year

In 2021/22 the 100 Group’s tax contribution increased by 5.2% on a two-year trend basis. The increase in tax was driven by net VAT, corporation tax and fuel duty as the economy reopened. However, total tax receipts remain 3.3% lower than before the pandemic, due to the 8% decrease in 2020/21.

The survey also highlights that 100 Group capital investment rebounded by 39%, to a total of £25.8bn in 2021/22, following a decrease in the first year of the pandemic. Meanwhile, R&D expenditure continued to increase throughout the pandemic, rising by 8% to £10.9bn in 2022, following a 15% increase in 2020/21.

According to the survey, in 2021/22, the 100 Group employed approximately 1.9 million people, or 5.8% of the total UK workforce, paying an average wage of £37,514 and contributing employment taxes of £12,903 per employee on average.

Andy Agg, chairman of The 100 Group tax committee, said: “Notwithstanding the new social and economic challenges that have emerged in recent years, this year’s survey highlights the resilience and agility of the 100 Group companies as the UK started to emerge from the pandemic. This year’s findings demonstrate that businesses were willing to continue to invest and innovate to play their part in the economic recovery amid considerable uncertainty.

“It is also important to remember and appreciate the valuable support that the Government provided through this period, while also recognising the contribution of the 100 Group to the wider economy and communities around the UK.”

Andrew Packman, tax partner at PwC, said: “As we deal with the impact of geopolitical and economic instability, this report illustrates the key role of large companies in sustaining investment in capital projects and research and development while supporting large numbers of well paid jobs.

“The tax contribution is recovering from the impact of Covid and the amount generated for the Exchequer is all the more important as the government deals with the challenges of the public finances. In difficult times, large and resilient companies are particularly important to our economy.”

Total Tax Contribution in detail

The largest tax borne was again corporation tax, at 32.2% of total taxes borne (compared to 27.0% in 2020/21). Employer NICs is the second largest tax borne, at 25.1% of total taxes borne (compared to 26.6% in 2020/21). The third largest is business rates (17.0%) followed by irrecoverable VAT (13.8%). 

For every £1 of corporation tax, £2.09 is paid in other business taxes borne. In 2005, the ratio was 1:1.

Employment taxes, at 29.9%, are the largest share of taxes collected (income tax deducted under PAYE: 22.5% and employee NIC: 7.4%) followed by fuel duties at 24.5%.. 

For every £1 of corporation tax borne by this group of companies, there is £6.65 of taxes collected.

Both taxes borne and taxes collected increased in this year’s survey, by 1.2% and 7.1% respectively. The TTC in 2022 is £4.5bn higher than in 2021.

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