§ Mr. Arnold Shaw
asked the Chancellor of the Exchequer how the proposed reduction of Income Tax allowances in respect of the coming increases in family allowances will apply in the case of surtax payers.
§ Mr. Diamond
The reduction of personal allowances will apply to Income Tax and will not affect the tax allowances deductable in computing surtaxable income. But where family allowance bears surtax the family receives a smaller net benefit from the allowance than the ordinary family paying tax only at the standard rate; and some surtax payers will find that the reduction in Income Tax allowances will take as much, or more, from them than they receive net (after tax) from the whole family allowance. In other words, at some point, which varies with the individual case b it is in the region of £10,000 a year or more, a surtax payer could be better oft if the family allowance was not drawn at all.
Any family wishing to give up family allowances altogether should notify the Ministry of Social Security's Family Allowances Branch at Newcastle and return their family allowances order book. The Ministry will send them a letter of acknowledgment which can be forwarded to the tax office, who will then not make any reduction of tax allowances in respect of family allowances given up.