The firm’s findings from the 2016 Total Tax Contribution survey for the 100 Group of finance directors found the UK’s biggest organisations recorded taxes borne of £23.7bn, while they collected and generated taxes of £58.6bn, representing 13.3% of total government receipts.

Taxes borne increased 3.6% from 2015, driven by increased corporation tax payments.  PwC says that while the statutory rate of corporation tax is at its lowest level since the survey began 12 years ago, more corporation tax is being raised since the banks can no longer offset all of their losses or compensation payments for tax purposes. There were also increases in the rate of the bank levy (revenue up 24.4% on the previous year). 

The total tax rate - a measure of the total tax cost compared to profit – is now calculated at 46.4%, up from 42.9 % in 2015 and 38.2% in 2008.

PwC says the tax contribution of the financial services sector has increased over the past six years, and accounts for 43% of total taxes borne by the 100 Group. Corporation tax payments from insurance companies were also up due to buoyant gilt and bond markets. However, the contribution from the oil and gas industry has declined, mainly due to the fall in oil prices. 

Tax take varies according to industry sector. Employers’ NIC and business rates continue to be the largest taxes borne, ahead of corporation tax in third place. Business rates is the largest tax for retailers, and a significant tax for telecoms and utilities. Bank levy is the largest tax for banks, and irrecoverable VAT continues to be a substantial tax for insurers. 

Over half of the value distributed by the 100 Group goes to the government in taxes (50.5%) and employees receive 31.8% in wages, leaving 12% of profit available for shareholders or for reinvestment and 5.7% for financing, the study found.

Kevin Nicholson, head of tax at PwC, said: ‘Cutting the rate of corporation tax doesn't necessarily equate to lower tax bills, as the reliefs available are also being withdrawn. This broadening of the tax base means large companies are paying more corporation tax overall. But corporation tax remains a relatively small part of business' tax costs and is likely to stay that way as the rate continues to come down.

‘The findings are a timely reminder of the value of the financial services sector to the public purse. With Brexit and continued regulation creating uncertainty, government will be mindful of strangling a golden goose.’