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Tax burden for major retailers up 65% since 2005

New research has revealed that the tax burden on the UK’s largest retailers has increased by 65% since 2005.


Tax burden for major retailers up 65% since 2005

A report by accountancy firm PwC on the Hundred Group of the UK’s largest businesses shows that retailers now have a total tax rate of 59% compared with an average of 39% across all industries within the group.

Despite the government reducing the corporation tax rate, payments of corporation tax by the UK’s biggest retailers were shown to have increased by 11% over the period while other business taxes, including business rates and employers' national insurance contributions, have risen by almost 80% since 2005.

Data analysed by PwC also reveals that business rate contributions increased by over 30% across the retail sector between 2008 and 2010. After a fall of 14% from 2007, retail corporation tax payments climbed by over 6% from 2008 to 2012.

Mary Monfries, head of tax policy at PwC, said: "Governments looking for stable tax revenues have rebalanced business taxes so there is less reliance on corporation tax, which is inevitably volatile as it is dependent on profits. For every £1 of corporation tax, the UK’s largest retailers now pay almost £2.40 in other taxes out of their profits. The rise in business rates in particular is felt by retailers given their large property portfolios."

Christine Cross, chief retail adviser to PwC, added: "Retail in the UK not only gives domestic employment, but also stimulates consumer confidence and makes a significant contribution to the public purse. However, high business rates represent a significant burden for those still trying to balance physical stores with online retail."

According to PwC’s study, the total value added to the economy by the largest UK retailers was £22.4 billion with profits made by the retail companies accounting for 20% of this figure.

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