UK Retail Sector Tax Bill Rises 65% in Seven Years
The UK’s major retail groups have seen their tax bill rise by 65% since 2005 according to a report by PwC, which says that retailers are now burdened by taxes outside corporate tax.
The tax burden has increased by almost two-thirds in the past seven years to stand at £8.3bn for companies counted in the Hundred Group of companies. Retailers belonging to the Hundred Group had a total tax rate of 59%, compared with an average of 39% across all industries in the group.
The UK government has cut tax rates, and is steadily reducing the corporate tax rate, which fell from 28% to 24% in April and will be further reduced to 20% by 2015. However, correspondingly there has been a surge in business rate and employer’s contribution to national insurance (NI) by almost 80%. The PwC study also says retailer in the Hundred Group have paid 11% more tax in the past seven years.
A number of major UK retail names have either departed from high streets in the past five years, such as the demise of Woolworths in late 2008, or have been rescued from imminent insolvency such as the deal by restructuring specialist Hilco earlier this year to
acquire music retailer HMV
. The recessionary conditions in much of Europe, coupled with tough competition from online retailers, have put UK’s bricks-and-mortar stores in difficulty.
The PwC report said that for every £1 of corporation tax, the retailers bore almost £2.40 in other taxes. However, online retailers not only are exempt from paying the costs bricks-and-mortar retailers have to bear, but also other costs like insurance payments. The British Retail Consortium (BRC) has lobbied for alternate taxation for online retailers, possibly a form of transaction tax, which will level the playing field for all.
The BRC has voiced concerns about the prevailing tax regime for retailers and has also claimed that the present structure is unsustainable.