Steve McCabe (MP for Birmingham Selly Oak) asked a series of written questions in the House of Commons concerning social enterprises and the benefits of creating special tax treatment for them. These have now received official responses from Treasury Minister Mel Stride.

Following an initial question seeking to find out how much corporation tax has been paid by social enterprises over the last five years, Mr McCabe’s then focussed on two possible special tax treatments.

The first looked at allowing social impact costs to be considered under allowances and charges, thus not included in the calculation of profits and losses.

The second asked for consideration of the benefits of reducing social enterprises’ corporation tax if the amount spent on social impact is 50% or more of their previous year’s profits.

Having stated that the information required for the initial query was not held in that level of detail, Mr Stride provided near identical responses to the two proposals.

His argument was that, whereas charities do not pay tax on most income as long as the money is used for charitable purposes, most social enterprises are considered to be companies. They are therefore subject to the same tax rules and reliefs as other companies say, for example, by making corporate donations to charities which would be tax deductible. He then pointed to Social Investment Tax Relief 2014 and the April 2017 increase in amount of investment social enterprises could raise through this relief to £1.5m

His main point, however, was that “Providing special tax treatment for social impact costs would be costly, complex to administer, difficult to defend against abuse, and could lead to competitive distortions”.

It therefore seems unlikely that the Government will be persuaded to make such exceptions for social enterprises or social impact costs any time soon.