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Investment, profits and tax

When companies invest for the future, they can defer – but not avoid – corporation tax due to the tax relief on capital allowances. This reduction in tax has directly led to lower customer bills.

Companies look to finance their investment as efficiently as possible. They use a mixture of debt finance and equity finance, of which the equity finance is more expensive, to compensate shareholders for the greater risk they face.

The stable and predictable regulatory regime has allowed companies to secure more of their finance through debt finance than the average UK company, which reduces bills for customers. It has also made the UK water industry an attractive destination for global investment in our essential services.

Successive governments have encouraged investment both through sector specific policies and through tax policy that applies to all companies.

When companies invest for the future, they can defer – but not avoid – corporation tax due to the tax relief on capital allowances. This reduction in tax has directly led to lower customer bills.