Almost half of the largest quoted companies in the UK are paying less than the current effective rate of 20% in corporation tax as they take advantage of tax reliefs and legitimate tax planning
The MHA MacIntyre Hudson research into 316 companies, including 144 FTSE 350 companies, found that 46% of those eligible to pay corporation tax were paying below the current 20% rate.
The study also found there were 36 FTSE 350 companies who posted profits before tax but had paid no corporation tax at all. Of these 36 companies, their combined untaxed profits totalled £6.243bn. If these profits had been taxed at 20%, it would have brought in an additional £1.25bn for the Treasury.
Over a quarter of FTSE 350 companies (85) paid less than 5% tax on profits, while a further eight paid less than 10% tax on their profits and another 19 paid less than 15% tax on their profits.
With corporation tax rates due to fall to 19% in 2017 and 18% in 2020, the Chancellor is under enormous pressure to maximise receipts from across the whole tax spectrum.
Patrick King, head of tax at MHA MacIntyre Hudson, said: ‘There is no absolutely no indication of any impropriety, companies can perfectly legally offset previous financial losses against their current year’s corporation tax bills.
‘But it is interesting to note just how many large companies are not actually paying corporation tax at the 20% rate.
‘With details surrounding the current spending review being announced shortly and some departments looking at 30% cuts, one would have thought this would be a priority for the Chancellor.’
The Autumn Statement is scheduled for 25 November and the firm is calling on the Chancellor, George Osborne, to recognise the importance to the economy of smaller and owner managed businesses by introducing proposals similar to Germany’s ‘Mittelstand’ benefits, such as special bank lending facilities which are state backed and assistance in gaining access to foreign markets.
The research excluded 34 FTSE 350 companies as these companies had posted financial losses in their most recently published full year accounts.
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