Who knows the tax bill for UK business?

Businesses pay and administer over 20 different taxes in the UK, so does anyone really know how much tax businesses pay?

According to a PricewaterhouseCoopers survey of 70 of some of the UK’s most well-known businesses, 99 per cent stated that there was insufficient understanding among investors, employees and stakeholders about the amount of tax they pay and 74 per cent called for greater visibility over taxes paid.

The business tax bill is increasingly in the public eye, with some politicians expressing the belief that tax planning has reduced contributions, while some business organisations believe that the tax bill is on the increase and a serious barrier to UK competitiveness.

John Whiting, tax partner at PricewaterhouseCoopers argued that a clearer picture is needed. He said: "The simple fact is that, at present, there is no consistent, reliable data on the total contribution of business to the UK Exchequer by way of tax receipts. However, what is clear is that UK tax receipts from business are far greater than the 2.5 per cent of GDP represented by corporation tax."

Sparked by differing views over the fiscal contribution of British business, the PricewaterhouseCoopers study sought to find out what information was available around business’s tax contribution and what businesses actually thought their total tax bill was.

Fifty-seven per cent of respondents estimated that their total tax contribution equated to more than 40 per cent of profit; 30 per cent estimated that this was in excess of 50 per cent - a huge increase on the 30 per cent headline rate of corporation tax widely discussed in public.

Total tax contribution

PricewaterhouseCoopers argued that a business’s tax contribution should be looked at from the point of view of all the taxes which it bears and would ideally also show those it administers on behalf of Government as well: in other words its Total Tax Contribution.

John Whiting said: "There is room for confusion and misinterpretation over a business’s tax bill, particularly if you look only at corporation tax. Businesses face a huge array of taxes over and above the tax on their profits. Their contribution to the economy in taxes paid needs to be better understood."

Some examples of the taxes paid by business are (figures from Pre Budget report 2004):

• Corporation tax £34.8bn
  
• Business rates £19.1bn
  
• National Insurance Contributions £77.7bn
  (half or more are employer’s contributions, the majority of the remainder are administered by business)
  
• Petroleum Revenue tax £1bn