Heathrow defends low corporation tax bill
Heathrow has hit back at claims that it doesn’t pay enough corporation tax, insisting that it is one of the largest business rate payers in the UK, having paid around £1 billion since 2006.
The airport, which handled its highest ever number of passengers last year, issued a statement saying that it ‘operates not only within the tax laws but also within the spirit of them’.
It was responding to a comment by Margaret Hodge of the all-party parliamentary group on responsible tax in which she claimed Heathrow had paid only £24 million in corporation tax over a decade while paying its owners £2.1 billion in dividends.
The airport said: "Corporate tax has been low to date because the Government offers tax breaks to companies to attract investment in building or upgrading British infrastructure – that means we have around £1 billion of deferred tax on our balance sheet which will go to HMRC in the coming years.
"The Government’s approach has seen Heathrow invest £11 billion over the course of a decade to transform the airport into the best airport hub in Europe.
"Against that investment, our shareholders have made only a modest return – essentially half being from the sale of assets, most of which were instructed by the Competition Commission, and the other half a return on the equity they have put into the company."
Heathrow pointed out that its return on capital is set by the regulator. "Heathrow contributes fairly to the UK public purse and the costs of investments are in fact spread over several decades through passenger fees – the same financing model used for building Terminals 2 and 5 and approved by the regulator applies equally to a third runway.
"Our passengers are choosing Heathrow and enjoying the benefits of major investments now – that’s why our service scores are at their highest, we have record passengers and we’re voted the best airport hub in Europe."
Nearly 75 million passengers travelled through Heathrow in 2015, an increase of 2.2% on 2014 and the airport’s highest ever number of annual passengers.
It said larger, quieter aircraft – including the double-decker A380 – contributed to the increase, with seats per aircraft increasing 2.1% to 209, load factors remaining constant at 76.5% and passengers per aircraft rising to 1.9% to 160 .
At the end of 2015, over 20 daily A380 departures and arrivals were operated by eight airlines at Heathrow.
The airport said emerging markets had also driven growth, with traffic to China up 14%, Latin America up 8%, and Middle East up 6%.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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