Tax break costs soar to £117bn
Cost of UK tax breaks rises by 13% to £117bn, with the main cause attributed to the exemption of properties from capital gains tax
FIGURES published by HM Revenue & Customs reveal that the cost of UK tax breaks has risen by 13% to £117bn, with the main cause attributed to the exemption of properties from capital gains tax.
The tax authority reveals that the cost of excusing main properties from capital gains tax has risen from £10.5bn to £18bn in the four years leading to 2015-16.
VAT relief for housebuilders has increased over the same period from £7.5bn to £11.4bn. Entrepreneurs’ relief has swollen from £2bn to £3bn, while R&D tax credits has also increased from £1.4bn to £2bn. The total tax break costs do not include the £1bn figure for minor reliefs and 218 tax reliefs where the costs are at present unavailable.
These figures may add fuel to the fire for politicians who have previously called for a review into tax reliefs.
Seema Malhotra, shadow chief secretary to the Treasury, previously accused George Osborne of being “remarkably uninterested in whether business tax reliefs are effective or efficient”.
“We should ask if the current regime is well targeted, whether behaviour really shifts or under what circumstances we may be rewarding investments that would take place anyway,” said Malhotra.