Spare a thought for the British tentacle of Microsoft. It reported an increase in local revenue for the 2021 fiscal year, but declining profits, according to financial accounts.
Documents filed at UK Companies House show Microsoft’s revenue rose to £4.86bn for the year ended June 30, from £4.03bn for the same period in 2020. Profit after tax, however, fell by 0.2% to £169.4 million.
Paying the tax inspectors a bit more this time around may have contributed to the bottom line slippage – Microsoft recorded a £51.5m tax on £220.5m profits in 2021, up from £43.5m out of £212.9m in 2020.
The company has split its revenue into “Product” (items like Intelligent Cloud and others) and a more nebulous “Services and Others”. The former rose more than 3% to £1.63bn, and the latter jumped 31% to £3.23bn. The company explained that the reason for the increases was simple business growth.
Corporation tax was little changed at £41.9m and £40.5m respectively.) However, in 2021 the effect of employees exercising stock options transformed a credit of £1.7 million to a charge of £1.1 million and deferred tax related to changes in tax rates. and the laws turned a £733,000 credit into a £3.6million outlay.
All of this made the total tax burden of £51.5m for 2021 compared to £43.5m in 2020.
A dividend of £17,000 per ordinary share was paid, equating to a total outlay of £255 million. Microsoft UK did not pay any dividends in 2020.
Headcount for the year increased from 3,491 to 3,969. Employee ROI was 35% in 2021 (compared to 33% in 2020).
“This is calculated as a percentage of total profit for the year divided by salary costs, excluding expenses related to share-based payments,” the accounts state.
Microsoft has also noted an increase in the UK corporate tax rate from 19% to 25% – which will come into effect on April 1 next year, and has adjusted its deferred tax accordingly, from a tax credit of £733,000 to an expenditure of £3.609 million.
With Microsoft’s product prices rising, customers would be forgiven for looking at these rising revenues with a slightly yellow eye. Although a relatively small increase in tax payments led to a very slight drop in profits after paying his dues to HMRC.
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