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News - 1 February 2013

Company tax rises despite the recession

Large companies have seen their overall taxes go up by 19% since 2005 despite the double-dip recession and a drop in corporation tax rate, according to a new report from PwC.

The total tax contribution of FTSE 100 companies surveyed revealed that despite a 17% fall in CT between 2005 and 2012; other taxes had risen by 58%.

In particular business taxes such as VAT, NICs and business rates had all gone up. The report said that last year, for every £1 of CT paid, the Hundred Group participants paid another £2 in other business taxes.

In total companies paid £77.1bn in tax last year, which equated to 14.2% of total tax receipts.

A spokesperson for the Institute of Chartered Accountants in England and Wales (ICAEW) commenting on whether the largest companies are making an appropriate contribution to public finances said: “On the evidence put forward in this latest survey the answer seems to be an unequivocal yes. It is also helpful to have data on the whole range of taxes that business pays and not merely tax on profits, corporation tax, which is the part of their contribution that has been in the public spotlight in recent months.”

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“Another interesting change was that while tax on company profits represented 50% of total taxes paid in 2005, it has now come down to one third. This reflects the reduction in the headline rate of tax over the period and this trend will continue as the headline rate comes down further to 21% from April 2014.”

If you need any help and advice for your business on Corporation Tax or VAT  contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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