Corporation tax receipts up by 18.3% on the year
The government’s latest statistics show that corporation tax receipts are up by 18.3% compared to a year ago, says accounting, tax and advisory practice Blick Rothenberg.
October is the month when the majority of companies have a corporation tax payment deadline and is considered a ‘spike month’, along with January, April and July. Looking at the month of October in particular, corporation tax receipts were £9,623m and although this is an increase of 12% on October 2016, the amount is not as high as the £9,738m received in January 2017, which was an increase of 25% compared to 2016.
Genevieve Moore, head of corporate tax at the firm, said:
“In the year to October 2017, corporation tax receipts were up 18.3% on the prior year. This is the highest year on year increase of any of the taxes, and double the average increase in tax receipts. So whilst falling corporation tax rates may not have been popular with the general public as individuals feel the squeeze on their incomes, the picture painted by these tax stats is positive and shows a growing and buoyant economy.
“It is too early to tell the impact that the reduced corporation tax rates will have had at attracting new international businesses to the UK, as it will take several years to see these numbers come through in tax stats as the businesses pass their first year end and make their first payments of corporation tax.
“However, we feel the message the UK is sending out to global businesses is clear and positive, and whilst we do not expect to see a further reduction in the corporation tax rate in the budget tomorrow, a move to reduce the proposed 17% (to be introduced in April 2020) to a new rate 15% would be welcomed by the profession, international and domestic businesses alike.”
Genevieve explained that whilst the increase in tax receipts demonstrates a growing economy and increasing taxable profits, the reduced year on year percentage increase (when compared to January 2017 corporation tax receipts) may be due to the falling corporation tax rates in the UK, as large companies with December 2017 year ends will be working out their estimated tax payments for their current financial year using an effective tax rate of 19.25%, following the introduction of the 19% corporation tax rate from 1 April 2017.
Helena Kanczula, corporate tax director at Blick Rothenberg, said:
“General tax receipts also continue to increase and while this is good news for the exchequer the reasons are difficult to pinpoint. The increases are likely to be a combination of factors, including a weaker pound boosting trade.
“We have also recently seen the introduction of rules which are targeted at bringing more profits within the charge to corporation tax such as those relating to UK property developments carried out through offshore entities. These factors, combined with the fact that HMRC have also become more aggressive about collecting the tax which is due to them may explain the general increase.”