Policy paper

Annex C: impact assessments in tax information and impact notes

Published 8 March 2017

This was published under the 2016 to 2019 May Conservative government

Annex C – impact assessments in tax information and impact notes

The impact assessment is found towards the end of the tax information and impact notes (TIIN) and sets out in summary form the impacts relevant to each tax measure.

Exchequer impact

This shows the impact of the measure on the forecast tax yield. Where the number is positive, it indicates that the measure is expected to increase overall tax yields by that amount in line with the forecast. When it is negative it indicates a reduction. Exchequer impact is shown in millions of pounds, and as most measure have a continuing impact the table will always show the impacts for 5 future tax years.

Where exchequer impacts are significant they are agreed with the Office for Budget Responsibility (OBR) and are shown in table 2.1 of the Budget report.

Where the exchequer impact is negligible the impact is less than £5 million in any one year.

Economic impact

If the economic impact shown is a significant macroeconomic impact it is certified by the OBR. This will apply where for example a measure affects inflation or growth.

This section will also shows the behavioural effects from the measure as set out in the costings note (published on Budget day).

Individuals and households impact

This shows the impact of the measure on individuals and households, and also the family and child poverty impact. Where a measure imposes a significant additional cost to individual taxpayers to either take advantage of a tax relief or to perform their duties to HM Revenue and Customs (HMRC), this is shown.

A quantitative impact will be shown where:

• each individual’s one-off cost to comply is greater than 2 hours (cost equivalent £30)
• each individual’s annual cost to comply is greater than 1 hour (cost equivalent £15)
• the total affected population had one-off and annual costs exceeding £7.5 million per year

Equalities impact

This shows the impact on the protected groups set out in Equality Act 2010 and equivalent Northern Ireland legislation in section 75 of Northern Ireland Act 1998. If relevant any Welsh language impact is also shown here. Section 149 of Equality Act 2010 imposes a duty on public sector bodies to have due regard for the three equality goals, which are to:

• eliminate discrimination
• advance equality of opportunity
• foster good relations between persons who share relevant protected characteristics with other people

The relevant protect characteristics for the purposes of section 149 of Equality act 2010 are:

• age
• disability
• gender reassignment
• pregnancy and maternity
• marriage and civil partnership
• race (including nationality)
• religion or belief
• sex
• sexual orientation

Northern Ireland legislation in the section 75 of Northern Ireland Act 1998 sets out an equality duty to have due regard to promote equality between persons of different religious belief, political opinion, racial group, age, marital status or sexual orientation, and also between men and women and those with dependants.

Business and civil society organisations

This sets out the impact on business and civil society organisations. If not otherwise set out in the TIIN this impact will show the overall positive or negative impact on these organisations. It will also show the additional costs to businesses of implementing the measure. For tax measures, costs are calculated using the ‘Standard Cost Model’. Where the costs are significant a compliance cost table is shown setting out the costs. Most measures don’t have a significant cost.

Consideration of the impact on business will take account of the following:

• the number of affected businesses
• sectoral and particular market impacts
• annual and one-off compliance costs: where there is a compliance cost or saving greater than £100,000 annual or £3 million one off

Three different levels will be shown:

• no impact
• negligible impact - the impact is below the £100,000 annual and £3 million one off cost or saving
• significant impact on business - the impact is over at least one of the thresholds and a cost table is shown

This section also deals separately with the small and micro business impact (businesses with up to 49 full time equivalent employees) and shows the extent to which they are included in the measure, consultation and any steps taken to reduce the impact on this sector.

Operational impact

This shows the cost to HMRC or other government department of implementing the measure, and where relevant indicates how the measure will be implemented.

Other impacts

This section deals with the other impacts which apply across. Impacts are shown where relevant to a tax measure. Impacts which are sometimes shown in this box for tax measures include:

• wider environmental impact
• justice impact
• competition assessment
• health impact