Water companies pay little tax, despite big profits

Labour pledges action

Updated: 


Seven of the UK's biggest water firms paid no corporation tax at all last year, despite raking in hundreds of millions of pounds in profits.

Thames Water, Northumbria, Severn Trent, Yorkshire Water, Sembcorp, Portsmouth and the not-for-profit Welsh Water all avoided the tax last year. Many even received tax breaks in the form of capital tax relief.

Figures from the House of Commons Library, analysed by the Mirror, show that, overall, the 19 water companies operating in the UK made profits of more than £2.05 billion in 2013, but paid just £74 million in tax.

Thames Water - the largest supplier in the UK - made more than £1.8 billion in the last five years. It paid more than £1.4 billion to its shareholders in that time, but just £2.3 million in corporation tax in that period - and none at all last year.

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The companies are able to do this by deliberately loading themselves with debt, to minimise their tax liabilities. And, says Labour, they are also using complex ownership structures to protect their profits from tax. The party wants to force the water companies to publish information including corporate structure and levels of investment, ownership, taxation and dividends paid to shareholders.

"It's not right that some companies pay no tax while millions of customers are struggling with the cost of living crisis. It's time for a new deal with the water companies," says shadow environment secretary Maria Eagle.

"Labour will reform the water industry, creating a national affordability scheme to support those customers who are struggling most with their bills. We'll also give the regulator tough new powers to cut bills and ensure that water companies play by the rules and put consumers first."

While the water companies handed out £1.86 billion to shareholders last year, they took more money from customers than ever before - an average of £393 per household.

That's an increase of 12.5% since 2010, while the average household incomes have fallen by 5%. Regulator Ofwat estimates that two million households in England and Wales now spend more than 5% of their income on water.

Earlier this year, water companies put up their prices by an average of 2%. Two - South West Water and Sembcorp Bournemouth Water - actually cut their prices; but Thames Water put prices up by the maximum it was allowed, 3.4%. It had initially requested to increase them by 8%.

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