Amazon’s main UK division, Amazon UK Services, has paid corporation tax for the first time since 2020.
This follows the end of the “super-deduction” tax break introduced by former Chancellor Rishi Sunak.
This change marks a shift in Amazon’s tax contributions as it moves away from government tax incentives that allowed for significant tax credits in previous years.
Amazon’s Tax Contribution Breakdown
The company reported a payment of £18.7 million in “current tax” last year. This is largely understood to be corporation tax.
This contrasts sharply with the tax credits Amazon received in recent years, which amounted to £7.8 million in 2022 and £1.1 million in 2021.
In total, Amazon’s entire UK operation paid £932 million in taxes last year .This includes contributions to business rates, corporation tax, and national insurance – up from £781 million in 2022.
Despite this rise, Amazon continues to face criticism for not disclosing the full extent of its tax affairs in the UK, particularly the specific profits accounted for against its £27 billion in sales.
The End of the Super-Deduction Scheme and Its Impact
The “super-deduction” scheme, allowed companies to offset 130 percent of investment spending on plant and machinery against profits. It ended after two years from April 2021.
It was replaced by the full-year expensing scheme. The new scheme offers a 100 percent tax relief on qualifying investments in plant and machinery.
As a result, Amazon’s tax relief was reduced, contributing to the company’s increased tax payment in 2023.
Analysts have attributed Amazon’s corporation tax payment this year to reduced capital spending and fewer government tax breaks, alongside lower historical losses to offset against profits.
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Sales Growth and Investments
Amazon’s UK sales rose by almost 5 percent to £6.9 billion in 2023. Pre-tax profits increased by 13 percent to £250.7 million.
The company stated it invested £12 billion in the UK last year. The spenhding included over £1.5 billion in infrastructure, which was a slight decrease from £1.6 billion the previous year.
Amazon’s cloud computing arm, Amazon Web Services (AWS), announced plans to invest £8 billion over the next five years in developing and maintaining data centers across the UK.
Calls for Transparency and Criticism
Paul Monaghan, CEO of the Fair Tax Foundation, has urged Amazon to be more transparent about its UK tax affairs. He is especially keen on how much profit is attributed to its UK operations.
He suggested a significant portion of Amazon’s UK revenue might be redirected to its historically “loss-making” subsidiary in Luxembourg, raising concerns about the company’s overall tax strategy.
In response, Amazon emphasized its ongoing investments in the UK, stating:
“As we continue to invest in our UK operations and workforce, we help fund public services and vital infrastructure, and create jobs throughout the country.”
Amazon’s Employment and Union Challenges
The company’s UK employee numbers remained steady at 75,000, following rapid expansion in previous years.
However, Amazon implemented a hiring freeze in early 2023 as part of an efficiency drive, resulting in the closure of three older UK warehouses and affecting 1,200 jobs.
The company also faced a dispute with the GMB union over recognition at its Coventry warehouse.
