26 July 2023
The Treasury Committee, made up of 11 MPs, has published a report exploring the tax reliefs in the UK tax system and the complexities that they bring.
Tax reliefs form an integral part of a tax system, either making it easier to interact with and process correctly (structural tax reliefs) or by incentivising particular behaviours (non-structural tax reliefs). Successive governments continue to add new tax reliefs and incentives based on their manifesto and topical issues of the time; however, few are ever removed.
With The Office for Tax Simplification (OTS) now gone, the remit of simplification rests on HM Revenue and Customs (HMRC) and HM Treasury. The committee welcomes HM Treasury’s commitment to tax simplification but this must not be focused solely on new policies.
The report recommends:
- a comprehensive and systematic review of existing tax reliefs to look for opportunities for simplification
- HM Revenue and Customs publish full costings of all tax reliefs (only 365 of 1180 are currently costed)
- greater public consultation on new and existing tax reliefs
- non-structural tax reliefs, those designed to promote certain behaviour, should be classed as public spending and scrutinised as such
- the Government should conduct five-year reviews of individual tax reliefs and commit to remove those reliefs that no longer serve their policy goal or are vulnerable to abuse.
You can read the full report for further context and information, including some interesting HMRC data on structural and non-structural tax reliefs.
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