Twitter UK pays less tax than people earning £120K

Social media company's UK division reported a 45.7% increase in pretax profit to £3.72m.

Twitter: apologised for recent guerrilla marketing campaign
Twitter: apologised for recent guerrilla marketing campaign

Twitter’s UK pretax profit grew by 46% last year after the social media company paid just £41,000 in corporation tax.

That is less than the tax bill for an employee earning £120,000 (£44,900 in income tax plus national insurance), despite Twitter generating an income of more than £100m in the UK for the first time last year.

The company paid £41,000 in tax on profit, compared with £2.4m the previous year – a 98% decrease. In its financial statement, Twitter said this was due to deferred tax credits and increases to share-based payments to staff.

Campaign understands that £731,000 is the amount in cash Twitter is paying for the calendar year 2018. Of this, £690,000 is deferred tax, which is treated differently for accountancy purposes.

Because tech companies tend to pay staff in equity instead of just salary, tax comes off after pre-tax profit has been declared (but before the tax is calculated). This accountacy procedure could mean that Twitter ends up paying more tax in the long-run, if the amount of tax paid on staff incentives is higher than it would have been on profits.

The microblogging platform’s UK division reported a 45.7% increase in pretax profit to £3.72m for the 2018 calendar year. 

This was despite turnover and costs increasing at almost the same rate. Twitter UK’s turnover was £103.48m (up 33.6%), while cost of sales were £100.01m (up 34.3%).

The increase in income for 2018 is a marked improvement on the previous year, in which turnover fell by 2.5%. Significant live events are important to Twitter’s commercial performance and 2018 included the men’s football World Cup.

Twitter employed 192 people in the UK at the end of 2018, up from 174 last year. This was driven by an additional 13 sales and marketing employees, who now make up almost two-thirds (65%) of Twitter’s UK workforce.

The company is also benefiting from cuts to UK corporation tax. The main rate of corporation tax was reduced from 20% to 19% in April 2017 and this will be cut again to 17% in April 2020.

Chalk and cheek

Meanwhile, Twitter has apologised for a guerilla marketing stunt in which tweets were stencilled on to pavements in San Francisco.

Rachel Gordon, a spokeswoman for the city’s Public Works department, said Twitter had illegally drawn the tweets on pavements and would be sent a bill for street-cleaning costs. 

Twitter said: "We looked into what happened and identified breakdowns in the process for meeting the cities’ requirements for our chalk stencils. We’re sorry this happened." 

The stunt, led by chief marketing officer and head of people Leslie Berland, was meant to be a follow-up to Twitter’s "Me on Twitter" campaign in which funny tweets by users are republished.