Building supplies firm Wolseley in tax move to cut outgoings

The FTSE 100 Index-listed company, which generates 81 per cent of its business overseas, said it would create a new holding company called New Wolseley as it looked to "achieve a competitive" corporate tax rate.

The group, which trades as Build Center and Plumb Center, said that, under the new proposal, the tax position of the UK business would remain unchanged.

The announcement came as Wolseley reported a 9 per cent rise in revenues to 13.2 billion and trading profits of 450 million in the year to July 31, up 1 per cent on a year earlier.

Wolseley chief financial officer John Martin said the change would reduce its corporate tax rate from 34 per cent to 28 per cent which, based on earnings in the last financial year, would save the company roughly 23 million a year.

Mr Martin said Wolseley wanted to move away from "unhelpful" UK legislation - called Controlled Foreign Companies (CFC) rules - which force the company to pay tax on its overseas earnings.

Mr Martin said Wolseley believed it was being "taxed twice" under the CFC rules.

Discussions were held with Government officials before the decision was made, Mr Martin added, but stressed it would not affect tax paid on the UK business, which employs nearly 10,000 people.

Chemicals group Ineos moved its headquarters from the UK to Switzerland in a similar tax-saving move earlier this year, while publisher Informa switched to a Swiss tax base in 2009.

Advertising group WPP and drugmaker Shire moved their tax residence to Ireland, while Guinness manufacturer Diageo and consumer brands firm Unilever have both threatened to follow suit.