Facebook’s UK tax bill jumps as profits rise


Facebook’s UK tax bill has tripled to £15.8m – but the social media giant will see an immediate cut because of a tax credit.

The final bill comes to £7.4m, since Facebook will see tax relief of £8.4m after awarding shares to employees.

In 2016, Facebook’s tax bill rose to £5.1m, following a major overhaul of the social media firm’s tax structure.

However, the company’s profits only climbed by £4m year-on-year from £58.4m to £62.7m in 2017. 

The company’s UK office provides marketing services and sales and engineering support to the company. 

Facebook’s revenue rose by a third year-on-year to £1.2bn in 2017, because of increased revenues from inter-company and advertising reseller services in 2017.

“We have changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax,” said Facebook’s Northern Europe vice-president, Steve Hatch.

In 2017, Facebook gave out 1.48 million restricted ordinary shares (RSU) to employees, a move that reduces its tax liability. 

This is one million fewer shares than it gave out in 2016. 

The publication of Facebook’s 2017 tax accounts follows extensive criticism from policymakers and the media over the last 12 months of how much tax tech giants typically pay in Europe.

Large technology companies have been condemned for moving sales through other countries and paying modest amounts of tax in the UK.

Last week, Chancellor Philip Hammond raised the prospect of introducing a new tax to address this concern. 

Meanwhile, online payments firm PayPal has announced that its UK subsidiary has agreed to pay an extra £3.1m in tax following a review by HMRC.

Expansion plans

The social networking giant said that it intended to expand its UK operations further in the future. 

In July, it signed a new facility lease in the UK.

In 2017, Facebook employed 330 more people than the previous year – a 34% increase in headcount. 

Mr Hatch said that the UK was Facebook’s largest engineering base outside the US.

Facebook is doubling its office space in King’s Cross, London, and will have capacity for more than 6,000 workstations by 2022, he added.