Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of bringing forward legislative proposals to amend corporation tax rules for social enterprises to include social enterprise social impact costs to be considered under allowances and charges not included in calculation of trading profits and losses.

The government recognises the contribution that businesses can make in addressing social issues in the UK.

Charities do not pay tax on most types of income, as long as they use the money for charitable purposes. Corporate donations to charities are also deductible from taxable profits.

Many social enterprises are companies. As such, they are subject to corporation tax on their profits, and eligible for the same tax reliefs as any other company.

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.

To help address the challenges that social enterprises face raising capital, the government introduced the Social Investment Tax Relief in 2014 to support investment in social enterprises across the UK.

In April 2017, the government increased the amount of investment that qualifying social enterprises could raise through this relief to £1.5 million.