UK Business Taxes: Navigating the Growing Complexity
In a striking revelation by Thomson Reuters, it has been found that a significant portion of UK business taxes, specifically 13 out of 19, have been introduced in just the past ten years. This influx of new taxes has seen the cost to businesses soar to £13.1bn over the last year, marking a sharp 27% increase from the previous year’s £10.3bn. The escalating figures underscore the burgeoning complexity of the UK’s tax regime, particularly for multinational corporations.
As the tax landscape evolves, companies find themselves at the forefront of tax collection, acting as intermediaries for HM Revenue and Customs (HMRC). From broad-spectrum taxes like VAT to niche impositions such as the forthcoming ‘Vape Tax’, businesses are shouldering a growing responsibility. This shift not only increases their workload but also places them at risk of compliance scrutiny, with potential penalties for missteps in tax collection or payment.
The 2024 Future of Professionals C-Suite Survey by Thomson Reuters indicates that ‘regulatory compliance’ has climbed to the top five concerns for a quarter of C-suite executives. Moreover, 44% of leaders have identified digital transformation as their primary focus for the next 18 months, highlighting the strategic pivot towards technology in managing regulatory demands.
Ray Grove, Head of Corporate Tax and Trade at Thomson Reuters, points out that while tax collection is vital for funding public services, the added complexity from new UK business taxes is a growing concern. “The challenge lies in balancing the need for these taxes with the compliance burden they place on businesses,” Grove explains. “Especially those lacking in sufficient resources.”
Notable new taxes affecting multinational companies include the Digital Services Tax and the Diverted Profits Tax, which have collectively cost businesses over £1.7bn since their inception. The Plastic Packaging Tax also poses a significant financial impact, with £406m paid by businesses since April 2022.
Grove emphasizes that while taxes play a crucial societal role, their introduction brings additional layers of complexity and cost. “Investments in talent and technology to ensure compliance are becoming increasingly important for corporates to manage these changes effectively,” he adds.
Future tax revenues are set to spike with recent government announcements, such as the Energy Profits Levy and the Electricity Generator Levy, projected to generate substantial sums for the Treasury in the coming years.
As UK business taxes continue to evolve, companies are urged to harness technology and expertise to stay compliant and mitigate risks associated with this complex regulatory environment.
