Wolseley aims to save £22m in Swiss switch

The FTSE 100 Index-listed company, which generates 81 per cent of its business overseas, said it would create a new holding company – 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. It employs employs nearly 10,000 people in Britain. The announcement came as Wolseley reported a 9 per cent rise in revenues to 13.2bn and trading profits of 450m 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 23m a year.

Mr Martin said Wolseley wanted to move away from "unhelpful" UK legislation – 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.

Chemicals group Ineos moved its headquarters from Britain 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.

Group chairman John Whybrow is to retire. He will be succeeded by former Imperial Tobacco chief executive Gareth Davis, who is currently the board's senior independent non-executive director, in January.