Our tax contribution
Integrity and good conduct are central to our culture. This means we aim to comply with both the spirit and letter of the law and are committed to conducting our tax affairs in an open and transparent way.
We look to comply with all of our tax filing, tax reporting and tax payment obligations globally. We also seek to maintain good relationships with the tax authorities in the key jurisdictions in which we operate. This may take the form of discussing key developments in our business and the potential impact of those developments on the amount of tax we pay. From time to time, our views on the appropriate tax treatment in any given situation may differ from those of the tax authorities, in which case we will work constructively and proactively to achieve an early resolution. We comply with the UK’s Code of Practice on Taxation for Banks and are treated as ‘low risk’ by HMRC*.
We believe it is important that business builds trust within society regarding its role and contribution. With this in mind, we support initiatives to improve international transparency on taxation matters, including OECD* measures on country-by-country reporting and automatic exchange of information.
Our tax strategy, available at www.schroders.com/taxstrategy, sets out our approach to tax matters across the Group. This strategy is reviewed and approved annually by the Audit and Risk Committee.
We incur corporate income tax on the profits arising in each country in which we operate. Corporate tax rates in these territories vary significantly and we apply a consistent global approach to transfer pricing that fairly recognises the economic contribution that our business in each country makes to the Group’s overall profit. On average, we pay corporate income tax at a rate of 20.7% (2015: 20.6%). See note 6 to the accounts on for further information. page 114
In our capacity as an employer, we bear payroll taxes (including social security contributions) on our employees’ remuneration.
We also incur value-added tax (VAT) on our expenses. While VAT is generally a tax on the final consumer of services, as a financial services business part of the VAT we incur is not recoverable resulting in a cost for the Group. Other taxes we bear include property taxes and business rates and withholding taxes on payments by clients and within the Group.
The total tax incurred by the Group in 2016 was £225.3 million (2015: £190.1 million).
In addition to taxes incurred, companies have an important role in collecting and administering taxes on behalf of governments, where the cost of the tax is borne by others.
The largest proportion of the taxes we collect relates to the income tax and social security payments we deduct from our employees’ remuneration. Certain types of service the Group provides are subject to VAT and the Group is responsible for the collection of such VAT and for its payment to the tax authorities.
The total tax collected in 2016 was £228.8 million (2015: £240.1 million).
Further information on the taxes we incur and collect can be found on our website at www.schroders.com/taxtransparency.
* See glossary.