Policy paper

Annex C: impact assessments in tax information and impact notes

Updated 23 March 2023

Impact assessments in tax information and impact notes

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

Exchequer impact

This section 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. Where the number is negative, it indicates the measure is expected to decrease overall tax yields.

Exchequer impact is shown in millions of pounds and, as most measure have a continuing impact, the table will always show the impacts for five 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 £3 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 also shows the behavioural effects from the measure, as set out in the costings note published on Budget day.

Individuals and households impact

This section 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 HMRC, this is shown.

A quantitative impact will be shown where each individual’s:

• one-off cost to comply is greater than two hours (cost equivalent £30)
• annual cost to comply is greater than one hour (cost equivalent £15); the total affected population had one-off and annual costs exceeding £7.5 million per year

Equalities impact

This section 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 protected 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 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 section shows the impact on business and civil society organisations. If not otherwise set out in the tax information and impact note, this section will show the overall positive or negative impact on these organisations.

It will also show the additional costs to businesses of implementing the measure, including familiarisation costs (for example, reading related legislation or learning about new procedures and processes).

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 do not 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 £5 million one off

Three different levels will be shown:

• no impact
• negligible impact, this means the impact is below the £100,000 annual and £5million one off cost or saving
• significant impact, this means 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 section shows the cost to HMRC or other government department in 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 the measure. Impacts are shown where relevant to a tax measure.

Impacts which are sometimes shown in this box for tax measures include:

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

Ministerial sign off for tax impact and information notes

I can confirm that Treasury Ministers have read the tax impact and information notes published on 3 March 2021 and are satisfied that, given the available evidence, each represents a reasonable view of the likely costs, benefits and impacts of the measures.

Financial Secretary to the Treasury