HMRC

Value of business tax reliefs jumps to a record £93.7bn per year

The number and value of business tax reliefs in use has risen sharply over the past decade. Only 39 reliefs were on offer to businesses in 2012/13, with a total value of £70.9bn

The value of tax reliefs claimed by UK businesses reached a record £93.7bn last year, up another 5% from the £89.3bn claimed the year before, according to new research by Thomson Reuters.

It said the growth in the value of business tax reliefs claimed has been driven by the rise in the number of reliefs available. There are now 57 different tax reliefs available to businesses in the UK that HMRC deems “significant enough” to report on, while several hundred more go unreported due to their low level of use. Many are so small that it is assumed they are worth negligible amounts to the business community.

The number and value of business tax reliefs in use has risen sharply over the past decade. Only 39 reliefs were on offer to businesses in 2012/13, with a total value of £70.9bn.

Jas Sandhu Dade, head of Corporates Europe at Thomson Reuters, said that while tax reliefs play a “vital role” in encouraging business growth, the tax system has become “enormously complex” for businesses, with the number and value of reliefs available changing each year.

Dade said: “Initiatives like “levelling up” and decarbonising the economy are inevitably going to lead to additional, targeted tax incentives for businesses. The challenge is not just which tax incentives to add, but also which incentives they should now remove to simplify the tax system.”

“Removing tax breaks can be incredibly hard as it is going to attract fierce criticism from those businesses that benefited from those tax incentives. Few politicians would want to scrap a tax incentive if it made a sector less competitive internationally or cost jobs.”

She added: “At the current rate at which tax breaks are removed, it is unlikely that the Government will be able to make a serious dent in the number of tax reliefs, or stop the steady increase in the number of tax breaks.”

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