The government has responded to two reports by the Treasury Committee, both of which focused on current tax reliefs. It believes a systematic review of all 1,180 plus tax reliefs is impractical and unwarranted, but did confirm its intention to extend the sunset clauses on the Venture Capital Trust (VCT) reliefs.
- The Treasury Committee published two reports in July 2023:
- In its response to the first report, the government:
- Agreed with the report's concerns that the current system of reliefs was open to abuse and un-costed in all but 365 of the Active reliefs, which currently total more than 1,180.
- Agreed that the simplification of the tax system was a priority.
- Defended its intention not to take up the Committee's recommendation of fully costing the remaining reliefs. It believes such a review would be impractical, costly in itself and cause uncertainty amongst taxpayers.
- Highlighted the current tax relief evaluations undertaken by HMRC on an increasing basis, that perform the same role.
- In its response to the second report, the government:
- Confirmed it would extend the sunset clauses for the VCT reliefs, including the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).
- Rejected the Committee's recommendations to link the reliefs to the provision of diversity statistics and compliance with the Women in Finance Charter and Investing in Women Code.
- Rejected the Committee's recommendations to increase the company age and funding limits for VCT and EIS reliefs in order to reduce regional inequality.
Useful guides on this topic
Tax reliefs uncosted, complicated & abused
The House of Commons Treasury Committee has published 'Tax Reliefs' which calls for a systematic review into the cost of over a thousand tax reliefs which complicate the tax system and are open to abuse.
An index to Capital Gains Tax reliefs
There are numerous Capital Gains Tax (CGT) reliefs in the UK: when do they apply and what are the conditions for relief?
EIS: Enterprise Investment Scheme
When can EIS relief be claimed? What are the conditions for EIS relief? What are the benefits of EIS relief?
SEIS: Seed Enterprise Investment Scheme
When can SEIS relief be claimed? What are the conditions for SEIS relief? What are the benefits of SEIS relief?
External links
Government responds to Treasury Committee’s Report on Tax Reliefs ahead of HMRC session
Government agrees further work needed to broaden the Venture Capital sector
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