An important tool for delivering the UK's economic ambitions.
It is often assumed that ‘tax relief’ relates to giveaways for big business. But, let’s be clear about the facts.
According to HMRC’s own statistics only 3% of tax expenditures (reliefs designed to promote particular activities rather than structural elements of the tax system) result from reliefs from corporation tax. The remaining 97% are mainly made up of reliefs from personal taxes (e.g. income tax relief for pension contributions, 0% VAT on things like food and children’s clothing).
If designed effectively reliefs can be an important lever for governments to deliver national economic policies. The UK’s R&D tax expenditure credit is an example of this. Providing relief to profitable as well as loss-making businesses, it can help to encourage investment activity that may not have otherwise taken place. Again, data from HMRC shows that in 2015-16 £22.9bn of R&D expenditure in the UK was used to claim R&D tax credits, of which 20% was by SMEs and 40% was clai
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