§ The effect on the revenue is as follows. The changes in the Income Tax, as distinct from the Surtax, will result in an annual loss of revenue of £322,000,000 gross, as against the annual avoidance of a future liability for new post-war credits amounting to £225,000,000 a year. Of this loss, the lifting of the personal allowances will be responsible for £160,000,000 a year gross. The standard rate reduction will be responsible for £120,000,000 a year gross, and the change in the graduation of the standard rate for £42,000,000 gross. If you subtract the avoidance of liability on account of the creation of new post-war credits amounting to £225,000,000, from the annual 1896 loss of revenue which I have indicated of £322,000,000, it leaves an effective loss of revenue of £97,000,000.
§ But the new Surtax scale will bring in some £7,000,000 a year extra and, therefore, the effective loss on Income Tax and Surtax together is reduced to £90,000,000. These figures of loss and gain of revenue have been struck at present levels of income, but I hope the encouragement given by these general reliefs from tax will lead to intensified production—particularly by Surtax payers—and, therefore, to more abundant revenue. The changes in the Income Tax, both as regards allowances and standard rates will come into force for the year 1946/7 beginning 6th April next. The coding of all the taxpayers coming under P.A.Y.E. will be reviewed in the coming months so as to ensure that their P.A.Y.E. deductions next year will accord with the new allowances. Employers will have the new Tax Tables in good time before the first pay day of next year.