Corporation Tax: Tax Allowances
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the (a) economic impact and (b) fiscal multipliers of the corporate tax reliefs implemented by her Department; and what steps she is taking to monitor that impact.
Answered by James Murray
The independent Office for Budget Responsibility (OBR) assesses the economic and fiscal outlook, including the impact of policy decisions made by the Government.
The OBR regularly publish reports which include explanations of their methodology. The 2024 Economic and Fiscal Outlook published alongside the Autumn Budget is published here: https://obr.uk/efo/economic-and-fiscal-outlook-october-2024/
In November 2023, the OBR published an article ‘Dynamic scoring of policy measures in OBR forecasts’ detailing how the fiscal multiplier framework is used to analyse the macroeconomic impacts of policy measures. Appropriate multipliers are applied to corporate tax reliefs and capital spending.
More recently, in August 2024, the OBR published a discussion paper ‘Public investment and potential output’ outlining further detail on how public investment, including capital spending, affects the macroeconomic forecast.
HMRC delivers proportionate and systematic monitoring and evaluation of tax reliefs to help provide evidence-based policy advice to Ministers.
Since 2020 HMRC have published 14 tax relief evaluations covering 19 different reliefs, and some of these evaluations cover economic impacts.
On 5th December HMRC published statistics covering the costs of non-structural and structural reliefs, this includes 46 costings that cover corporation tax reliefs.
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