Exclusive: How Palantir harvested millions in UK tax breaks

Palantir is benefiting from millions of pounds of tax deductions that allow it to pay very little corporate tax in the United Kingdom despite soaring profits, an investigation by openDemocracy reveals.

The controversial tech firm has won at least £670m in UK public contracts in recent years, which have helped to make the country its second-largest market by revenue after the United States, where it is headquartered. Yet despite accounting for 10% of the company’s global revenue last year, its tax payments in the UK amounted to less than 5% of its total global cash tax spend, according to US filings.

The filings suggest Palantir’s UK subsidiary paid less than $1.08m (£820,000) in cash tax in the UK in 2025 – less than it paid in Korea, Japan, France and Germany – after accumulating tax deductions due to stock prices. Palantir’s stock has surged since the company went public in 2020, peaking in 2025 before paring back gains this year.

In 2024, Palantir’s UK subsidiary reported pre-tax profits of £25.3m, but assessed its local corporate tax requirement as only around £2m, according to the latest accounts filed with Companies House. This puts its annual corporate tax rate at roughly 8% – far lower than the 25% usually paid by businesses with profits over £250,000 in the UK. 

In 2023, the company’s tax rate was lower still, at 4.7% on pre-tax profits of approximately £19.1m, and in 2022 it was 4.2% on pre-tax profits of around £19.9m. Its UK accounts are not yet available for 2025 onwards. Taken together, that’s just £3.7m of tax on £63.4m in cumulative pre-tax profits over three years.

openDemocracy analysed hundreds of pages of Palantir’s filings in the US and the UK from 2020 to 2025, a period when the company recorded extraordinary growth in revenue and profits. We found the company’s low tax exposure was down to two factors: A structured arrangement that limits the profits recognised in the UK, and a provision in the UK tax code that rewards companies with significant tax breaks in return for compensating their employees with stock rather than in cash. 

This strategy, experts say, is legal and very effective. In 2020, the company had already accumulated £32m in tax breaks in the UK, according to Companies House, of which about £26m were due to what the company called “employee share acquisition relief”. Two years later, the total size of the UK tax break had ballooned sevenfold to $303.4m (approximately £230m) in net operating losses in the UK, which its parent company said “can be carried forward indefinitely” in its 2022 annual filings in the US. 

The nature of annual filings makes it hard to assess the current size of Palantir’s accumulated tax deductions, but it is clear that the company’s tax deductions in the UK have grown much faster than its profits. The most recent Companies House accounts suggest the company gained about £92m in tax deductions in 2024 alone, of which it used a small portion to reduce its tax assessment for the year from £6.3m at the standard rate of 25% to only about £2m on pre-tax profits of £25.3m. 

“When profitable companies are paying very little tax, especially when much of their revenues derive from taxpayers’ money itself, then it’s important to ask why,” said Mike Lewis, the director of TaxWatch. “Is it because tax incentives and tax breaks are poorly targeted? Or is it because companies are shifting profits in ways that our tax system is supposed to counteract?”

In Palantir’s case, the company’s surging stock price created deductions at a scale that would lower its tax burden even if the company recognised more profits in the UK. 

The company is far from the only tech firm to have reduced its UK tax burden in this way. Fair-tax proponents have called for the UK to do a better job of taxing tech companies since Meta (then known as Facebook) provoked outrage for paying only £4,327 in corporate taxes in 2014, after paying more than £35m to staff in a share bonus scheme. 

“It’s a consistent pattern,” said Nathan Goldman, professor of accounting at North Carolina State University, whose work focuses on corporate taxation. “All of these companies are following the same pattern. They’re not doing anything illegal.”

Goldman said that while there are “lots of knobs you can turn” to get deductions, share-based compensation for employees is the one that can yield significant gains in cases where stock prices rise sharply in a short period of time.

Yet, Palantir’s critics say its case stands out because much of its revenue derives from public sector contracts, including the cash-strapped National Health Service. As openDemocracy revealed back in 2020, Palantir’s work with the NHS went from a £1 contract to £1m. The company’s current NHS contract is worth at least £330M.

“If these findings are accurate, they expose the staggering extent to which Palantir is taking from our country while giving back as little as possible,” said Green Party Deputy Leader Mothin Ali. 

“It has pocketed hundreds of millions of pounds in public contracts, yet appears to have paid an effective tax rate that is a fraction of that paid by the doctors, nurses and other public sector workers who keep our services going. Greens have said before that Palantir should pack its bags and get the hell out of our NHS. What will it take for this Labour government to finally show them the door?”

“At a time we are asking for more scrutiny into the Federated Data Platform contract, it is mindboggling that Palantir are siphoning millions of pounds out of the UK,” said Liberal Democrat MP Martin Wrigley, who has been a vocal opponent of the UK government’s work with Palantir. “Our NHS needs to be working with trusted suppliers, and Palantir seem to be consistently undermining that trust. It’s time the government gets serious and builds the offramp.”

“Multinationals like Palantir are able to exploit the defects in current international tax rules to pay lower effective tax rates overall,” said Sol Picciotto, an emeritus professor at Lancaster University and senior adviser with the Tax Justice Network. “This is particularly problematic for those providing services which can be delivered globally, giving them great freedom to decide where and how to declare taxable profits.” 

“Palantir is paying little or no corporate income tax in both the US and the UK, despite its bread and butter being government contracts,” said Paul Monaghan, chief executive of the Fair Tax Foundation. He called the strategy “textbook Silicon Valley profit-shifting” and added that the “generous corporate tax treatment” of these types of share-based payments is “in play on both sides of the Atlantic”. 

“Whilst Palantir’s share price grows, these are likely to continue to depress the company’s effective tax rate.”

“It is therefore re-assuring to see an indication in the US parent’s financial statements that they are the subject of a live inquiry by HMRC that encompasses the last two years,” he said, referring to a note in the company’s US annual filing for 2025, which reads that the “Company is subject to potential examination by tax authorities” in “the UK for tax years 2024 through 2025.”

openDemocracy has reached out to Palantir for comment, but had not heard back at time of publication. This story will be updated if the company responds.

Behind the shield

Business leaders insist that the UK’s corporate tax regime stifles investment and cripples economic growth. In 2021, when then-chancellor Rishi Sunak announced that corporate taxes would rise from 19% to 25%, The Times carried an article headlined “Companies ‘will quit UK’ over Sunak’s corporation tax rise”.

Yet an examination of Palantir’s accounts reveals that the UK’s corporate tax regime allows fast-growing technology companies to harvest millions of pounds in tax breaks by richly remunerating their employees with stock options.

Compensating employees in this manner, said Goldman the accounting professor, creates “incentive alignment”, where employees have a stake in the success of the company – improving employee retention rates – as well as allowing companies to preserve cash (as offering stock options doesn’t impact cash flows), and generating future tax deductions if, and only if, the company succeeds.

But if a company succeeds like Palantir, he added, the tax deductions generated in this manner are very large.

The key to this mechanism lies in Part 12 of the Corporation Tax Act 2009, which allows a company to claim a tax deduction relief equivalent to the difference between the market price of the stock at the point at which they are acquired by the employee and the original strike price paid by the employee. 

“UK tax policy allows qualifying companies these kinds of deductions,” said Dr Federica Casano, lecturer in business and tax law at the University of Leeds. “The relief under Part 12 of CTA 2009 is broadly neutral as to the type of instrument – restricted or unrestricted shares, options or RSUs [Restricted Stock Units].”

In Palantir’s case, the stock has soared by over 1,000% since the company went public in September 2020, thereby creating hundreds of millions of pounds of tax deductions in the UK as the company’s employees have cashed in.

In 2024, the company’s stock price closed the year at about $77. That year, the accounts reveal, the company generated about £92m in tax deductions. The following year, the stock peaked at $207.52 in November 2025, before paring back its gains, suggesting the company would have harvested a fresh round of multi-million-pound tax deductions for that year. At the time of publishing, the stock is priced at about $107.

“The corporation tax deduction available in the UK is among the more generous. Stock-based compensation is supposed to reduce payroll pressure on cash flow, especially for start-ups,” said Lewis from Tax Watch. 

“The fact that it is also available to established, profit-making companies means that it can effectively wipe out very profitable companies’ tax bills for years if share values significantly increase. In an era of almost historically unprecedented tech stock valuations, it may be time to look at restricting the deduction.”

Wittgenstein’s tax rules

Around the world, governments have long struggled to get corporations to pay more tax in their respective countries. Raise taxes in one jurisdiction, the argument goes, and companies will simply restructure to recognise profits elsewhere. 

In 2021, the Organisation for Economic Cooperation and Development (OECD) sought to prevent a race to the bottom by establishing a global minimum tax rate of 15%, often referred to as a ‘top-up’ tax. In January 2025, as these rules were being rolled out across the world, the Trump administration not only withdrew from the agreement, but announced it would sanction countries that sought to tax US companies under the framework. Since then, the G7 has struck an uneasy carve-out for the US, the implications of which are still unclear.

Even so, the UK remains an outlier, both in how it taxes multinational Big Tech companies and also in its willingness to contract out vital public services to these companies. 

“The case of Palantir clearly shows the defects of these rules, and also highlights the failure to resolve them over the past 13 years through the OECD,” said Lancaster professor Picciotto. “That’s why developing countries launched negotiations for a global tax treaty through the UN. The UK should strongly support this initiative to ensure that multinationals can be taxed where they have real activities, including revenues.”

“It’s notable that the UK government has just agreed, at the behest of the Trump administration, to exempt US-headquartered companies from one key defence against such profit-shifting: the global minimum ‘top-up’ tax,” Lewis said, adding that the Office of Budget Responsibility estimates that this will cost the UK at least £700m in tax revenues every year. 

Palantir’s UK subsidiary had to pay this ‘top-up’ tax last year on low-taxed profits within the group, in the most recent year, Lewis noted. “It may not have to in the future. That’s an example of how the UK’s acquiescence to the White House puts UK firms at a disadvantage compared to their US competitors, and costs us much-needed tax revenues.”

Governments in several of Palantir’s other key overseas markets – none of which is as large as the UK – are already distancing themselves from the company. France and Germany have announced they are moving away from Palantir’s products, while the company’s work in Korea remains largely commercial as part of an alliance with the Hyundai group.

Meanwhile, in the UK, Palantir continues to work with government bodies, causing public outcry. And the company’s leadership remains bullish on its  prospects and profitability. In a letter to investors in May this year, CEO Alex Karp noted the company had generated $871m in profits on $1.6bn in revenue in the first three months of 2026 alone. 

“Our quarterly profit – the largest in our company’s twenty-three-year history – has more than quadrupled in only twelve months,” Karp wrote. “What business in the world, at this scale, has ever accomplished anything of the sort?”

Karp began his letter to shareholders with an enigmatic quote from Austrian philosopher Ludwig Wittgenstein’s Philosophische Untersuchungen: “And to think one is obeying a rule is not to obey a rule.”

– Ethan Shone contributed to this report