Britain cuts big companies' tax bill by 26 pct in 2013

LONDON Thu Jan 30, 2014 6:49am EST

LONDON Jan 30 (Reuters) - Britain cut the tax bills of many of its biggest companies by about a quarter last year, a survey showed on Thursday, as government efforts to cut the nation's debt stir controversy over spending cuts and tax breaks.

Corporate taxation has risen to the top of the political agenda in Britain in the past 18 months, amid revelations that companies i Apple and Google reap billions in profit thanks to UK customers but pay little tax in the country.

A group including most of the biggest UK companies said their corporation tax bills fell 26 percent last year, adding to big drops in earlier years, after the government cut tax rates.

Prime Minister David Cameron has promised to ensure all companies pay their fair share but has also slashed tax rates to levels well below large European peers, to try and encourage businesses to invest and create jobs.

In the year to March 2013, the 100 Group of major companies, which includes most of those in the FTSE 100 Index of major businesses, had a tax bill of 6.0 billion pounds, a survey conducted by business consultants PricewaterhouseCoopers (PwC) for the group said.

In addition to lower tax rates, PwC said weak profitability and a drop in North Sea oil and gas production reduced tax payments.

The 100 Group's tax bill has fallen steadily since 2006, when the survey estimated members paid 12.6 billion pounds in corporation tax, the British form of corporate income tax.

The latest survey showed the burden of some taxes rose, including the levy on banks - imposed to help pay for the financial crisis - property-related taxes and higher labour taxes as employment and wages rose. However, overall, the total taxes borne by the group fell 6 percent in the year.

The Conservative-led government has gradually cut the corporation tax rate from 28 percent, when it was elected in 2010, to a planned 20 percent next year, to encourage investment.

"Corporation tax will continue to contract, the rate being an influence on that, but that is not to say that there isn't a considerable amount of economic activity that's helping the overall tax take increase," he said.

Before the election, finance minister George Osborne predicted his planned corporate tax cuts would not hit revenues because they would be offset by cuts in capital allowances and other corporate tax breaks.

A spokeswoman for the finance ministry said:

"Our major corporation tax reforms, part of the government's long-term economic plan, are supporting jobs, growth and investment, and playing a critical part in delivering a sustainable economic recovery."

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