Official Statistics

Structural tax relief statistics (January 2023)

Updated 7 December 2023

1. About this publication

This publication provides Official Statistics on estimated costs of tax reliefs where these are available and lists the tax reliefs where estimates are not available and explains why. These estimates provide costs from outturn years 2017 to 2018 up to 2021 to 2022 and forecasts for the current tax year 2022 to 2023.

1.1 Structural and non-structural tax reliefs categorisations

Many tax reliefs are integral parts of the tax system. These reliefs have various purposes, such as to define the scope of the tax or calculate income or profits correctly. These are classified as ‘structural tax reliefs’.

Other reliefs are actively designed to help or encourage particular types of individuals, activities or products in order to achieve economic or social objectives. These are classified as ‘non-structural’ tax reliefs.

The split between ‘structural tax reliefs’ and ‘non-structural tax reliefs’ is not always straightforward, and these categorisations remain under continuous review. Many reliefs have both structural and non-structural purposes. For example, capital allowances can provide relief for commercial depreciation as well as an element of accelerated relief. While the former can be regarded as a structural part of the tax system, the latter is non-structural as it provides additional benefit to business.

Where reliefs combine both structural and non-structural elements, they have been allocated to the category deemed most dominant.

This publication provides 2 tables:

• table 1: Estimated cost of structural tax reliefs
• table 2: List of structural tax reliefs where cost estimates are unavailable

Within each table the reliefs are also categorised by the taxes to which they apply, for example, Income Tax and Corporation Tax. Reliefs which apply to more than one tax are in a tab called ‘Multiple tax types’. This publication has been updated to better align with HMRC’s central management of tax reliefs, meaning it focuses on the non-structural tax reliefs.

For more information about non-structural tax reliefs, please look at the non-structural tax reliefs bulletin.

2. Interpretation of estimates

How to interpret these figures:

• these figures are estimates of the amount of relief which is claimed and subsequently granted each year

• these estimates do not represent the gain to the exchequer should a relief be abolished because of behavioural effects, interactions between reliefs and wider economic impacts of withdrawing relief

• these estimates do not account for interactions between reliefs

• estimates should not be summed, as the use of a given relief can be highly dependent on the use of another
  • there are also wider economic impacts if reliefs were removed, which would not be accounted for in the sum of the costs of reliefs

• the estimates are in nominal £ million

• estimates should not be compared publication to publication as changes to policy, modelling methodologies, data, and assumptions mean that estimates could be calculated on a different basis year to year

• please refer to the supplementary notes on the tables for additional explanations for specific reliefs

• single-year cost estimates are provided for the latest year that data was available when the costing was undertaken

  • the uncertainty rating provided should be considered when using these estimates
• all costs are on an accruals basis unless otherwise stated, that is, they represent the effects on the tax liabilities for each year, not receipts in each year
  • some costings are on a National Accounts basis which usually incorporates a time-shifted cash adjustment to ensure costs are recorded as close as possible to the time of the underlying economic activity that generated them
• these tables are classified as Official Statistics, falling outside the scope of National Statistics owing to our forecasting the estimates, and insufficient data

The estimates are static cost estimates, which means that they do not explicitly model behavioural responses which could result from changes to the reliefs.

These figures should be regarded as broad estimates, as the loss of revenue from a tax relief cannot be directly observed so the estimates are often based on assumptions. Some tax reliefs are used by a small number of taxpayers. For these reliefs, publishing a cost estimate could possibly individual taxpayers to be identified - in these cases we do not report the cost.

Homeworkers allowance

Employers can make tax free payments for the additional household costs incurred by employees who work at home under homeworking arrangements. Where an employer does not reimburse these costs, providing certain conditions are met, employees can claim tax relief on a flat rate allowance of £6 per week or on the actual costs incurred where evidence is provided. The circumstances under which a tax free payment can be made by the employer are less restrictive than the conditions that need to be met where the employee claims tax relief.

The costs have increased in recent years due to the pandemic and mandated working from home which has resulted in an increased number of claims. There was also an operational easement to allow annual claims.

The cost estimates for this relief can be found in the structural cost estimates table under the income tax tab.

3. Methodology and data quality

For many reliefs, HMRC does not require information on the use of the relief to be submitted on tax returns as this is not needed for establishing the liability to tax. This may be because the relief is an exemption rather than a deduction from income or profits. In such cases, HMRC uses suitable external information sources, if available, to estimate usage of the relief and thereby its cost.

There are two types of cost estimate presented in this release. HMRC tax relief statistics have historically included multiple-year cost estimates for a subset of reliefs. For reliefs where no estimates were previously published, we have prioritised estimating a single-year cost for non-structural reliefs.

Where the cost is estimated at zero or less than £3 million they are shown as ‘negligible’. The cost estimates have been rounded according to their size, as follows:

• under £100 million - rounded to the nearest £5 million
• over £100 million but under £1 billion - rounded to the nearest £10 million
• over £1 billion - rounded to the nearest £100 million

In the structural cost estimates tables, a hyphen in a cell indicates that the relief was not in operation in that particular year, or that we were unable to estimate the costs due to the uncertainty caused by coronavirus (COVID-19). Where there is a hyphen in the number of claimants section, we are not able to estimate the number of claimants.

Previously published tax relief cost estimates may change in future years of the publication, due to revisions to data, methodology or OBR economic determinants.

3.1 Multiple-year cost estimates

The download tables provide estimates of the revenue costs for the six years 2017 to 2018 to 2022 to 2023. These estimates are based on information available at 12 January 2023. For many reliefs, estimates of the cost rely on information on tax returns, statistics from other government departments and other data that may not be available for the most recent years at the time the estimates are produced.

For these reliefs, the figures for 2022 to 2023 (and in some cases earlier years) are projections based on previous years’ outturn data. The forecast or projection estimates are indicated with an asterisk.

For multi-year cost estimates, we have included information on the type of data and methodology used for estimating the cost of each relief. The ‘Data and methodology’ column sorts reliefs into the categories below:

• there is no administrative data on the relief, it is estimated entirely using alternative data
• administrative data on the use of the relief, with significant assumptions applied
• administrative data on the use of the relief, with minimal assumptions applied

In subsequent annual updates, forecasted or projected figures will normally be replaced with estimates based on actual data as those estimates become available. Where estimates based on actual data change materially from one year to the next, commentary is provided explaining the main reasons for the changes.

The tax rates and allowances used in the estimates include the impact of decisions in the 2022 Autumn Statement. The forecasts reflect the OBR’s November 2022 Economic and Fiscal Outlook.

VAT reliefs

For most VAT reliefs, HMRC administrative data cannot be used to estimate costs, as VAT returns do not include information at a product level (as this would impose an excessive and unnecessary administrative burden on businesses). Instead, external economic and market data is used to estimate the value of the supplies to which the VAT reliefs apply.

The primary data sources used for estimates of costs of VAT reliefs in this publication are:

• for consumer expenditure, the Consumer Trends datasets produced by the Office for National Statistics: Consumer trends, UK - Office for National Statistics
• for business expenditure, the intermediate consumption sections of the supply-use tables published by the Office for National Statistics: Input-output supply and use tables - Office for National Statistics (ons.gov.uk)

Both these Official Statistics datasets are balanced with the national accounts and are considered to be the most reliable sources of data on expenditure at the levels of categorisation they provide. These data sources are supplemented with other datasets as required for more granular estimation, and for some reliefs more specific external data is used in place of the general Consumer Trends and Supply Use datasets.

Multiple Dwellings Relief (MDR)

The 2021 publication of Tax relief statistics included a note that the statistics for Multiple Dwellings Relief (MDR) had been withdrawn and the methodology was being reviewed. The Multiple Dwellings Relief (MDR) update was published in August 2022. The review identified 2 errors which have now been corrected.

3.2 Uncosted Reliefs

There are a number of reliefs in the publication for which no cost is currently available. In many cases this is due to a lack of administrative or good-quality targeted data available on which to base an estimate. HMRC has prioritised additional analytical resource to undertake a multi-year project to provide more public information on the costs for reliefs where none are currently published, prioritising non-structural reliefs.

Where reliefs lack administrative data, this can be because HMRC does not require information on the use of the relief on tax returns to establish tax liability. This may be because the relief is an exemption rather than a deduction from income or profits.

In such cases, HMRC uses suitable external information sources, if available, to estimate usage of the relief and thereby its cost. In general, HMRC avoids increasing taxpayers’ administrative burdens by requiring information to be submitted solely for statistical purposes unless the benefit of this would be expected to outweigh the cost.

The tax reliefs for which no estimate of cost is available are analysed by area of the tax system for reference. The table also provides a categorisation indicating the reason why the cost information is not available, as follows:

Table 1: Uncosted relief reason codes

Reason code	Reason explanation
A	Information on the usage of this relief is not required in tax returns and cannot be reliably estimated from other data sources, and the cost of collection for statistical purposes is disproportionate.
B	Information on the usage of this relief is reported to HMRC, but the relevant data is not held in a centralised form, and the cost of gathering for statistical purposes is disproportionate.
C	Information on the usage of this relief is available, but the cost is not quantifiable as it is dependent on other unknown factors.
D	Introduction of the relief is too recent for any data to be available.
E	Exemption under the Freedom of Information Act, such as Data Protection.
F	Other (reason stated in each case).
N	We are reviewing what data is available, reason code to be allocated.
*	Data is available and requires further analysis.

4. Quality assurance

We are committed to continuously improving the Official Statistics we publish. A panel, led by senior HMRC analysts, was set up in 2018 to review the methodology of reliefs on a rolling basis. Our quality assurance processes were reviewed in October 2020 and we have in place checks to minimise the risk of error and a rigorous quality assurance review process. The publication is also peer-reviewed by different team members and overseen by senior analysts including the team’s senior statistician.

In May 2022 we published a new background quality report for the tax relief statistics.

5. Annex - Revisions since December 2021 publication

Each year the estimates are updated for a number of reasons including:

• new outturn data received into the department from tax returns. For some taxes there can be a substantial delay in tax
• return data (or other data sources) being received due to the nature of that particular regime
• improvements to methodology behind collecting information or forecasting the estimates
• including the latest OBR economic forecasts in HMRC forecast models where possible

The revisions table below shows changes in the non-structural tax reliefs, which is largely due to incorporation of the latest available data. The following table includes commentary on any large changes in the figures since the previous publication. For our purposes large changes are defined as those greater than £500 million or 25 per cent.

Table 2: Summary of revisions to structural tax relief cost estimates since December 2021

Name	Code	Tax type	Reason for change
Finance and insurance	VAT - S5	VAT	Updated for latest data.
Health Services	VAT - S6	VAT	Updated for latest data.
Alternative Property Finance	SDLT - S1	Stamp Duty Land Tax	Updated for latest data.
Part Exchange Relief	SDLT - S5	Stamp Duty Land Tax	Updated for latest data. There has also been a fall in the number of claims by over 10% between the last 2 years.
Relief from 15% rate of SDLT	SDLT - S8	Stamp Duty Land Tax	Updated methodology. HMRC has revised estimates for this relief following the discovery of two errors with the underlying data: 1) relief figures were not calculated for freehold purchases; 2) the relief calculation for leasehold purchases incorrectly assumed 100% relief from SDLT. This has increased the average relief per year by around £60m.
Tied oils scheme (Industrial Relief Scheme)	HOD - S1	Hydrocarbon Oil Duties	The cost of 2021 reliefs declined significantly due to a decline in tied oil volumes. This is due to due to temporary reductions in UK manufacturing. Following this substantial decline, there is less certainty on whether volumes will recover in 2022.
Exclusion for fuels used in CHP stations to produce non-electrical outputs	CPF - S2	Carbon Price Floor	Updated for latest data. The changes for all years after 2017-18 are driven by a modest increase in fuels used in CHP stations to generate non-electrical outputs.
Exclusion for fuels used in electricity generation in Northern Ireland	CPF - S3	Carbon Price Floor	Updated for latest data. The increase in 2021-22 reflects an increased figure for NI electricity consumption.
Supply of taxable commodities not for burning or consuming in the UK	CCL - S4	Climate Change Levy	Updated for latest data. The substantial rises in 2020-21 and 2021-22 reflect an increase in forecast energy exports.
Coal, Lignite and Slate	AL - S3	Aggregates Levy	Revised methodology. The increase in years 2020-21 and 2021-22 is driven from changes in expectations about COVID-19.
£10 Christmas bonus for pensioners	IT - S1	Income Tax	Updated for latest data. Updated for outturn data.
Maternity allowance	IT - S15	Income Tax	Updated for latest data.
Personal allowance	IT - S17	Income Tax	Updated for latest data. Updated for latest administrative and economic data.
Reduced contributions for self-employed not attributable to reduced pensions eligibility	NIC - S5	NICs	Revisions to OBR determinants used in costing. Outturn SPI data and upward revisions to forecast self employed profits have increased estimates.
Double Taxation Relief CT	CT - S1	Corporation Tax	Updated for latest data. The changes in the estimates are largely due to the availability of new outturn data for 2020/21. It was previously forecasted that DTR claims would decrease by 40% in 2020/21, however the outturn data has now shown a decline of only 21%. This higher than expected outturn, along with a forecasted rise in foreign income (in line with the latest OBR determinants) increases the forecast for 2021/22 and 2022/23.
Capital allowances (includes Annual Investment Allowance, Ring-fence oil and gas trade, first-year capital allowances for plant and machinery)	IT_CT - S2	Income Tax and Corporation Tax	Updated for latest data. For year 2020/21, the decrease is due to new outturn data being lower than what was forecast in the last publication. The increase between the years 2021/22 to 2022/23 is driven by the impact of the super-deduction; 2022/23 is the first full year of the super-deduction on an accruals basis.
Double taxation relief	IHT - S2	Inheritance Tax	Updated for latest data.
Nil rate band for chargeable transfers not exceeding the threshold for estates left on death	IHT - S4	Inheritance Tax	Updated for latest data.
Loss on sale of land	NA	Inheritance Tax	Updated for latest data.
Loss on sale of shares	NA	Inheritance Tax	Updated for latest data.
Annual Exempt Amount CGT	SU - CGT1	Capital Gains Tax	Updated for latest data. Higher outturn for 2020/21 than forecast due to disposals possibly being brought forward due to an OTS report signalling rate changes that have not been implemented. For further discussion visit the most recent CGT statistics publication at https://www.gov.uk/government/statistics/capital-gains-tax-statistics
Tax relief for decommissioning expenditure	PRT - S2	Petroleum Revenue Tax	Updated for latest data. Actual decommission expenditure for 2021 was higher than previous estimates, that was based on earlier NSTA survey data . This resulted in net upward revision to PRT repayments, even allowing for overall recovery in energy prices in 2021.
British Government securities where owner not resident in UK	IT - S5	Income Tax	Updated methodology.