Science & Tech

Facebook is probably paying less tax than you

Facebook paid £1,000 less in tax to the British Government than the average worker in 2014.

The world's largest social media company reported a loss of £28.4m in the UK last year, despite its parent company in the US doubling profits to £2.9bn, and employee bonuses doubled to £35m.

This loss allowed Facebook UK Ltd to minimise its corporate tax bill for the year to only £4,327, despite its reported revenue doubling to just under £105m from £49.8m.

A worker earning the average British salary of £26,500 would have paid £5,393 in combined income tax and national insurance in the same year - around £1,000 more than Facebook. The loss in its accounts, published last week, was a result of the soaring cost of wages and benefits for its 362 British staff, who received share-based benefits of £35.4m, on top of an average basic wage of £112,718.

The tax figure is likely to increase pressure on Facebook UK over the low level of tax it pays each year. In 2013, Facebook UK incurred a corporation tax charge of only £3,169, and received a credit of £182,000, after posting a loss in its annual accounts.

Its tax bill prompted Margaret Hodge, then chair of the Commons Public Accounts Committee, to say Facebook appeared to be "using elaborate corporate structures and artificial devices for no purpose other than to avoid tax".

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