The UK’s biggest listed companies generated £89.8bn ($113.5bn) in tax during the 2022/23 financial year, PwC research shows.
The 19th annual Total Tax Contribution of the 100 Group estimates the companies contributed £29.1bn in taxes borne – those that are a direct cost to the company – and a further £60.6bn in taxes collected, such as income tax and employee national insurance contributions (NICs) deducted under PAYE, for the year ended 31 March 2023.
The report has been compiled from data provided by 92 of the largest listed companies in the UK, and has been extrapolated to estimate the overall contribution of the 100 Group as a whole. The survey period includes a time of significant pressure on people and businesses across the country. With public finances already stretched from supporting the economy during the pandemic and the energy crisis, there was further fiscal tightening after the 2022 Autumn Statement with the impact being reflected in this year’s survey.
In 2022/23 the 100 Group’s total tax contribution increased by 7.2%, driven by employment taxes and the energy profits levy (EPL) that took effect from May 2022. National insurance contributions increased as a result of the temporary 1.25 percentage point increase that applied to seven months of 2022, along with higher wages and salaries in 2022/23. There are also seven months’ worth of energy profits levy included in this year’s survey. With the introduction of the plastic packaging tax and the energy profits levy, there were 30 business taxes identified by the survey, the highest number of taxes since the survey began. For every £1 of corporation tax, the 100 Group companies paid another £2.43 in other taxes borne, and £7.11 in taxes collected.
The survey also highlights that total capital investment was above £25bn again this year. After a 38.4% increase last year, there was a 2% decrease in capital investment, totalling £25.3bn in 2022/23. Meanwhile, R&D expenditure continued to increase, rising by 14.9% year-on-year to £12.5bn, driven by aerospace and pharmaceuticals companies.
The 100 Group employed approximately 1.8 million people in 2022/23, or 5.6% of the total UK workforce, paying an average wage of £40,058 (national average wage is £34,963) and contributing employment taxes of £14,601 per employee on average.
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100 Group perspective on the transition to Net Zero
This year’s survey asked companies 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, and 11% expect tax policy to have a high impact on meeting the target.
Over two-thirds (68%) of companies said that more generous green incentives would be the most effective way to assist the UK in transitioning to net zero. Two in five (41%) see government intervention such as the Inflation Reduction Act in the US and the Green Deal Industrial Plan in the EU as having a significant impact on the UK’s competitiveness. However, companies in the survey were less concerned that US and EU green incentives would have a significant impact on their own investment in the UK, with only 14% of companies rating the impact as high or very high.
Heads of tax have indicated the transition to net zero will have a significant influence on future decisions. The responses suggest that 41% of companies are expecting their business model to be significantly impacted by the transition, 44% expect a significant impact on business investment and 35% expect a significant impact on their research and development.
Commenting on this, 100 Group tax committee chair, Andy Agg, said: “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 10.0% of total government receipts, the 100 Group total tax contribution underlines the stability the largest UK companies offer to the economy and wider society.”
PwC tax partner, Andy Wiggins, added: “The 2022/23 time period will be remembered as one impacted by geopolitical and inflationary pressures, and this report demonstrates the key role large companies play in the UK to sustain investment in capital projects and research and development, while supporting large numbers of well paid jobs.
“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.”