Businesses claim record £94bn in tax reliefs

Businesses claim record £94bn in tax reliefs
The value of tax reliefs claimed by UK firms reached a record £93.7bn last year, up on the £89.3bn claimed in 2020, according to new data from Thomson Reuters.
The company said 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 that HMRC reports on, while several hundred more go unreported due to their low level of use.
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”.
Sandhu Dade added that while there has been some discussion on whether there are too many tax reliefs, many recognise that reducing the number of available reliefs might disadvantage the businesses who rely on the smaller reliefs.
Many businesses also worry that reducing the number of tax reliefs will simply result in them paying more tax.
“Initiatives like ‘levelling up’ and decarbonising the economy are inevitably going to lead to additional, targeted tax incentives for businesses,” said Sandhu Dade. “The challenge is not just which tax incentives to add, but also which incentives they should now remove to simplify the tax system,” she added.
“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.
“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,” she explained.