Starbucks UK has paid more than £8 million in tax over the past year following a sharp rise in pre-tax profits to £34.2 million, up from less than £2 million the previous year. Sales grew by 3.8% after significant investment in turning the business around.
The coffee giant's UK arm had faced public outcry in 2012 over its minimal tax contributions, prompting a pledge to pay more. Prior to that, Starbucks paid only £8.6 million in corporation tax in 14 years of UK trading, despite billions in sales.
The turnaround is attributed to two main factors: improved profitability from exiting expensive store locations like Oxford Street and increasing profit per cup, and changes in accounting for payments to other parts of its global business, such as licensing fees and coffee purchases. These adjustments mean more profit is now declared in the UK rather than in lower-tax jurisdictions like the Netherlands or Switzerland.
Kris Engskov, Starbucks' European boss, said: 'Thanks to the commitment and hard work of our partners, Starbucks has delivered its largest ever after-tax profit since opening in the UK in 1998.' A company spokesperson added that the focus was on renegotiating leases, closing unprofitable stores, expanding franchises, and cutting costs, including transferring 74 stores to franchisees and opening 29 new franchised outlets.
