Spotlight on quality assessment report: Profitability of UK Companies and Gross Operating Surplus of non-financial corporations

18 January 2024
Last updated:
16 January 2024

Key facts

Key Facts about ONS Profitability of UK companies and Private non-financial corporations Gross Operating Surplus statistics

What are private non-financial corporations (PNFCs)?



These are companies that produce goods and services for a profit. They exclude corporations controlled by government, most charities and those that provide financial services.

What does the Profitability of UK companies measure?



A company’s profitability measures the size of its profits (including and excluding depreciation) compared with the capital it has used when producing goods and services.



It shows a company’s operating surplus as a percentage of the capital it has employed to produce goods and services.


What is PNFCs GOS?



It is the profit companies make on the goods and services they produce after they have paid their workers.



It is companies’ income from production (output) after deducting the cost of raw materials, services, overheads and labour costs.

A simple example…


A baker will buy ingredients and turn them into bread, which they will sell.

This sale is their output.


They will also have overhead costs such as energy and water bills. They then pay employees and what remains is their Gross Operating Surplus.


What is capital employed?

Capital employed is the replacement cost of all the capital used by companies to produce their goods and services. It includes buildings, transport equipment, machinery and equipment, software and research and development.


Why are PNFC GOS statistics important?



The Bank of England – uses the data to monitor financial risks and to analyse companies’ profitability.



The Office for Budget Responsibility – uses the data to forecast company profits which can be used to estimate future tax revenues.



HM Revenue and Customs (HMRC) – uses the data to analyse incoherence with overall company tax returns.



Wider economic analysis – the data is used in productivity analysis and to track long-term labour share trends.

How is annual PNFCs GOS estimated in the UK?



GOS estimates are compiled using information on gross trading profits of UK companies from HMRC corporation tax returns.



Various adjustments are applied to convert corporation tax statistics into the economic concept of GOS. Examples include expenditure on some capital items such as software purchases and depreciation.

What is the relationship between Gross Domestic Product (GDP) and PNFC GOS?

pie chart-income-GDP


It is an important component of the income approach when calculating GDP. In 2022, the PNFCs GOS accounted for 17% of GDP.

What are the challenges in directly estimating PNFCs GOS?



The availability of data – HMRC corporations tax return data are only available up to two years after the reference period.




To produce more-timely quarterly estimates of GOS, data from growth indicators and other corporate reports are used.


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