º£½ÇÊÓƵ businesses overpaid a staggering £14.2bn in corporation tax last year, a report by a prominent accountancy firm has revealed, highlighting the ongoing challenges posed by the nation's intricate financial system.
Chancellor Rachel Reeves has assured entrepreneurs and investors of her support for British business, despite economic pressures from President Trump's tariffs and tax increases announced at the Autumn Budget, as reported by .
However, a complex tax regime is causing deep-seated issues, with many firms overpaying HMRC, as per findings by UHY Hacker Young.
The accountancy firm's research, derived from a Freedom of Information request, indicates that º£½ÇÊÓƵ companies overcompensated the government by £14.2bn in corporation tax in the year ending April, affecting approximately 400,000 businesses.
The study notes that the overpayment for the fiscal year 2024 to 2025 was 21 per cent higher than the previous tax year.
Corporation tax, which deducts a portion from company profits, operates on a tiered system, with the principal rate set at 25 per cent for businesses earning profits above £250,000.
UHY Hacker Young's accountants argue that HMRC's approach often results in firms paying excessive corporation tax due to potential penalties if profits fall short of projections.
This situation can lead to "significant cash flow problems," the researchers warn, as it falls upon companies to reclaim any overpaid funds.
"Overpaying corporation tax is a double hit for struggling businesses," remarked Brian Carey, a partner at UHY Hacker Young.
"Not only do they suffer from lower-than-expected profits, but they also see vital cash locked up with HMRC."
This statement comes on the heels of a separate report by Thomson Reuters which highlighted that businesses now contribute to over a quarter of all º£½ÇÊÓƵ tax receipts.
The surge in corporation tax receipts has been a significant factor, with the government now collecting over £200bn through this tax.
Concurrently, concerns are being raised about HMRC potentially underestimating the extent of tax evasion.
The Public Accounts Committee expressed in February that the estimated tax gap of £5.5bn in the 2022-23 tax year was "just the tip of the iceberg."
