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Wednesday
Mar172010

PWC Survey Highlights Burden Of UK Corporation Tax

A friend and I were just debating over lunch whether we thought the economy was truly on it’s way to recovery and to what extent taxes were playing a part in either hindering or stimulating the economy. Most people will be aware that the VAT rate was reduced for 2010 to try to stimulate the economy and that it went back to its normal rate in January of this year. HMRC have also undertaken other smaller initiatives to help the economy.

After a lot of debate, my friend and I ended up with different points of view.  His thoughts were around the VAT implications, which I’ll write about in another blog soon. What I found most interesting was the extent to which the UK’s larger companies appear to be paying proportionately more taxes even with us being in an economic downturn.

A recent PriceWaterhouseCoopers (PWC) survey of the FTSE top 100 firms found that the average total tax rate (including corporation tax, VAT, employment taxes etc) had increased from 2008 to 2009 by a whopping 3.4%. Although that doesn’t sound like a lot if you’re talking about a small company with a turnover of around £100,000, when you think about the billions of pounds churning through the top 100, that’s a staggering amount of income for the Exchequer.

There is a lot of talk nowadays about the increasing tax burdens the UK is placing on UK limited companies and whether or not this could force businesses to set up shop elsewhere in order to avoid the large tax burdens. The UK still has one of the lowest corporation tax rates of most major economies but despite this manages to have a very complex tax system that means additional taxes on other areas of business.

The UK tax system is a complex system of laws and rules that can sometimes seem daunting and potentially overwhelming to anyone not in a tax or accounting job. If you are confused by the tax system or maybe want to see if there is a way of legitimately reducing your tax burden, why not talk to one of St Matthew’s advisors. We’ve been helping hundreds of other companies with their tax issues for years now.

 



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