Tax rate of FTSE-100 companies drops nearly a third in last two years

31 October 2011

Publications that covered this article include Accountancy Age, The Daily Express, The Daily Mail and Reuters, 31 October 2011.

  • Large businesses still concerned about UK tax regime

The tax rate paid by FTSE-100 companies has dropped almost a third over the last two years, according to our new research.

The effective tax rate of FTSE-100 companies (i.e. tax as a percentage of profits) is now just 26% compared to 35.8% two years ago. This tax rate has fallen even as profits have risen.

While this is partly a result of a fall in the headline corporate tax rate over the last two years[1], the steep decrease has also been partly caused by some British companies moving their headquarters overseas.

FTSE 100 companies are also generating a higher percentage of their revenues overseas. This means that they are able to take advantage of lower prevailing tax rates in those overseas jurisdiction

Average effective tax rate of FTSE-100 companies

(Calculations based on latest annual reports published as at August 31st)

Roy Maugham, Tax Partner at our London office comments: “Companies have a duty to their shareholders to keep the tax they pay under control.”

“With more of their operations now based overseas it is only sensible for them to ensure that their business is structured properly so that they are paying tax at the best rate.”

“That doesn’t mean they are doing anything that is illegal or pushing the boundaries of acceptable tax planning. They may simply be reducing their activities in high tax overseas jurisdictions or controlling their non-allowable expenditure more effectively.”

Roy explains that the last few years has also seen a growing number of British companies move to jurisdictions with lower tax rates in order to reduce their tax burden. Shire, WPP and United Business Media all chose Dublin as the location for that move.

There are mixed signals as to whether this trend will continue with WPP confirming it would return to the UK.

Roy adds: “HMRC has made strenuous efforts to close tax loopholes and increase the tax take in recent years, but by squeezing companies too hard, it risks driving them offshore.”

According to recent research (June 11) carried out for HM Revenue & Customs (HMRC), one in four (26%) large businesses is considering relocating part or all of its business abroad. Of those, 58% say that tax is the main factor pushing them to relocate.

Roy says that reducing tax bills is not the only reason why companies move overseas.

Roy explains: “Tax uncertainty in the UK, particularly successive Government’s relentless tinkering with the tax system - as well as HMRC’s crusade to close tax avoidance loopholes in the past few years - have undoubtedly had an impact on the attractiveness of the UK as a place to conduct business.”

However, concerns over the relocation of UK businesses have spurred the Government to introduce new measures to make the UK tax environment more competitive.

Roy comments: “The tax burden is a vital consideration for highly mobile multinational companies when deciding where to be based. Whilst the Government has made efforts to make the UK tax regime more attractive, will it be enough to stymie the tide of British companies still thinking about the exit?” 

 [1] The corporate tax rate is 26% this year (1/4/11 to 31/3/12), down from 28% in the two previous years.

Keep up to date

We produce a range of informative publications focusing on the latest accounting issues. Click to add yourself to our mailing list.


Latest news

HMRC tighten up disclosure rules

HMRC have announced a number of changes to the Liechtenstein Disclosure Facility to limit the benefits for those that HMRC sees as abusing the arrangement.

Bank lending in the UK is still stalling, down 2.2% in real terms last year - and far behind G7 average

In our recent study we have found that bank lending to the private sector in the UK is still lagging far behind the G7 average, despite all the Government’s efforts to boost the availability of credit.

28 out of Top 30 highest income tax areas are 'Stockbroker Belt' towns

Our research shows this is due to the shift of the tax burden onto higher earners, who have been hit by an increase in the upper rate of tax, which now sits at 45p.

Money raised in IPOs on AIM triples - highest sum in six years

The Alternative Investment Market has delivered its biggest year for IPOs since 2007/8.

Demands on academy governors prompting growing recruitment crisis

Our recent research into academy school governance shows that the increased responsibilities placed on Governors at academy schools risk creating a recruitment crisis.

HMRC pays out £4.6 billion in corporation tax refunds

Figures obtained by us reveal that some 286,000 businesses received a corporation tax rebate in the year to 31 March 2013.

Information flows from Switzerland to HMRC...

The 2011 UK-Swiss Tax Agreement is concerned not just with the levying of withholding taxes. It also provides for the passing of information in respect of Swiss accounts to HMRC.

London’s Silicon Roundabout remains top area for UK start-ups

Our recent research shows that the area around Silicon Roundabout is once again the most prolific area of new business generation in the UK.

Small Cap Awards winners announced

Sponsored by UHY Hacker Young, The Small Cap Awards winners have been announced.

The Small Cap Awards 2014 Nominees

Sponsored by UHY Hacker Young, The Small Cap Awards shortlist nominations have been announced.

The Small Cap Awards 2014

Sponsored by UHY Hacker Young, The Small Cap Awards will shine a light on the best companies and participants in the small and micro-cap community.

1 in 2 HMRC VAT fines against businesses ruled incorrect

HMRC has disclosed that one in two penalties it issues against businesses for the late filing of VAT are incorrect.

HMRC use of external debt collectors more than doubles in two years

HMRC has doubled its use of private sector bailiffs and debt collection agencies over the last two years as it takes more aggressive action to chase overdue tax.

Swiss/UK Tax Agreement is like the Cheese - Full of Holes!

Under the terms of the Swiss/UK Tax Cooperation Agreement, most UK-resident holders of Swiss accounts were offered a simple choice.

British companies struggling with world's major economies highest fuel costs

The UK has the highest petrol pump prices of any major world economy, hitting businesses hard as they struggle to pull out of recession.

Cost of listing on AIM rises as companies seize window of opportunity to raise funds

The professional fees paid by companies to brokers and nomads for a placing on AIM now account for 9.5% of all funds raised, up from 8.4% in the previous 12 months.

A chance to come clean about your second income

HMRC have announced a “Second Incomes Campaign”, the latest in a series of opportunities for non-compliant taxpayers to provide details of undisclosed income.

Aberdeen has UK's biggest increase in disposable income since the credit crunch

The average household disposable income for the UK’s Top 40 towns and cities has risen by just £1,761 over the same period to £14,068. 

Latest publications

2014 Academies Financial Handbook

Download our summary and comments on the newly released 2014 Academies Financial Handbook.

Doing business in the UK

A detailed report providing key issues and information for investors considering a business operation in the UK.

Experience with stock market clients

Our Capital Markets specialists have significant experience advising and supporting fully listed, AIM and ISDX clients. This document provides a list of stock market clients as at August 2014.

Academy schools update: August 2014

Download our most recent academy schools update which concentrates on the risks involved with academy governance, the academies Risk Protection Arrangement, your impending auto enrolment staging date, the recent EFA investigations into academies and handy tips for the lead up to your audit.

Taxflash: Users of tax schemes face large tax bills this Summer


Our dedicated tax investigations team can provide impartial and practical advice in how to deal with the very real consequences of participating in a tax scheme.

UK tax guide 2014/15

Download our guide for practical tax tips to guide you through the tax system and help you plan to minimise your liability.

UHY's AIM Review 2013/14

As part of our commitment to the small cap community we have developed a review of the AIM market.  

Tax update, issue 43


Our regular summary of all the latest tax issues that will affect you and your business.

Cryptocurrencies: Bitcoin explained


Why Bitcoin has taken the financial spotlight this year.

VATflash July 2014


Our July VATflash discusses the changes to customs procedures for imports of goods into the European Union.

Dealsflash: London Nusantara Plantations plc


We recently acted as reporting accountants for the admission to ISDX of London Nusantara Plantations plc.

UHY Insights: Financing Growth, June 2014

FD forum 2012 image

Following our recent FD Forum we would like to share with you the UHY Insights paper on Financing Growth. This document highlights the importance to businesses of being informed and prepared and contains useful information and recommendations to help achieve this.

UHY International Business issue 29


The latest issue of our twice-yearly publication featuring articles on current business affairs in countries & business cultures around the world.

UHY service offering to Academy schools

Whether you are thinking of converting to academy school status or have already done so, we can help you with the complex array of issues you will need to deal with from best value audit and accounts to preparation to fundraising and VAT issues.

Taxflash: Mileage rates - June 2014


HMRC regularly publish approved ‘fuel only’ rates which have, again, changed.

Why UHY?

Corporategraphic 14

UHY is a cohesive international network of independent member firms providing audit, accounting, tax and business advisory services across the globe.

Academy schools: Multi-academy trust services

School 4

Our academy specialists can advise and support you and your MAT from initial set-up and ongoing as auditors.

Buy to let properties - tax considerations


Should properties be owned personally or through a limited company?