Our approach to tax
At Schroders we are committed to conducting our tax affairs in an open and transparent way.
This means that 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.
The amount of tax we pay and collect is driven by a number of factors including the locations of our people and clients, and the tax rates and rules in each of the countries in which we operate. Corporate tax rates in particular can vary significantly by country. With this in mind, we apply a consistent global approach to allocating profits that fairly recognises the economic contribution that our business in each country make to the Group's overall profits.
As a global business, we do have a number of companies in 'low-tax' countries including the Channel Islands and Bermuda. These companies operate in the same way as other Group companies, providing a range of asset management and wealth management services to their clients. They account for a negligible proportion of the Group's revenues, reflecting the limited size of their business.
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 information. We are a signatory to the UK's Code of Practice on Taxation for Banks and are treated as 'low risk' by HMRC.
Our tax strategy sets out our approach to tax matters across the Group more generally. This strategy is reviewed and approved annually by the Board Audit and Risk Committee.
The Taxes We Pay
We have offices in 27 countries including the major financial centres of Europe, the Americas and Asia Pacific. In each of these countries we make direct payments to governments for various taxes including corporate income taxes, employer taxes and employer social security, income taxes, state and cantonal taxes, business rates, property taxes, customs duties, value-added tax, sales taxes and environmental taxes.
In addition to paying taxes, companies also have an important role in collecting and administering taxes on behalf of governments, where the cost of the tax is borne by others. We collect employee taxes, social security liabilities, withholding taxes, indirect taxes and other local taxes in the countries in which we have operations.
Total Tax Contribution
In 2016 our total tax contribution from global activities was £454.1 million, of which £225.3 million related to taxes paid by the Group and £228.8 million related to taxes we collected on behalf of tax authorities, primarily through our employee payroll.
As a UK headquartered business we paid over £250 million of taxes to the UK government in 2016. This was 55% of our total contribution and is a reflection of our significant presence in the UK where we employ over 2,200 people.
Corporate income taxes represent about 31% of the taxes that we contribute globally. We pay a wide variety of additional local taxes and approximately 57% of our total economic contribution to governments relates to the employment taxes we pay and collect.
The total tax incurred by the Group in 2016 was £225.3 million (2015: 190.1 million).
The total tax collected in 2016 was £228.8 million (2015: £240.1 million).
|Corporate income taxes||51.9||9.8||44.9||32.8||139.4|
|Employment taxes paid||43.6||3.1||4.8||11.0||62.4|
|Irrecoverable VAT paid||8.2||0.2||0.9||8.3||17.6|
|Property and other taxes paid||5.0||0.0||0.6||0.3||5.9|
|Total taxes paid||108.7||13.1||51.2||52.3||225.3|
|Employment taxes collected||136.9||27.1||21.5||10.3||195.8|
|Indirect taxes collected||3.1||0.0||15.0||4.6||22.7|
|Withholding and other taxes collected||1.6||0.1||0.5||8.1||10.3|
|Total taxes collected||141.6||27.2||37.0||23.0||228.8|
|Total taxes paid and collected||250.2||40.3||88.3||75.3||454.1|
We are required by law to disclose tax information in our annual report and in respect of certain regulated entities (see below).
Capital Requirements (Country-by-Country Reporting) Regulations 2013