Income Tax

HC Deb 28 April 1981 vol 3 cc373-4W

Mr. Field

asked the Chancellor of the Exchequer if he will update the information on income tax given in the answer to the hon. Member for Birkenhead on 11 March 1980, Official Report, c. 544.

Mr. Peter Rees

It is estimated that to allow tax relief in respect of personal allowances at a rate no higher than the basic rate would yield in the region of £300 million in a full year at 1981–82 income levels. This figure assumes that couples who would find it advantageous to elect for separate taxation of the wife's earnings would be able to do so, even if they do not currently find it advantageous.

There is greater than usual uncertainty about this estimate since industrial action has prevented a more precise calculation being made on the Inland Revenue

	Percentage of earnings	Percentage of income
Weekly Earnings	Single	Married	Married with 2 children	Married with 4 children
£	per cent.	per cent.	per cent.	per cent
30	11.3	7.7	4.0	2.3
60	24.5	17.1	13.4	11.0
80	27.8	22.3	19.9	17.3
100	29.8	23.4	23.2	21.3
150	32.5	29.5	27.7	26.2
200	33.8	31.6	30.1	28.8
250	33.3	31.2	30.1	29.0
300	34.7	32.5	31.5	30.6

National insurance contributions are at the not contracted out rate of 7.75 per cent. up to an earnings limit of £200 per week.

computer. I have provided the information in respect of mortgage interest to the hon. Member in a previous answer on 15 April.—[Vol. 3, c. 155.]

Mr. Ralph Howell

asked the Chancellor of the Exchequer what is his estimate of the increased revenue from income tax in 1981–82 deducted from those earnings less than the national average wage, as a result of the decision not to index tax allowances in accordance with section 22 of the Finance Act 1977.

Mr. Peter Rees

About £1.1 billion in full year terms for those with estimated incomes in 1981–82 less than the national average wage, taken as the annual equivalent of the average weekly earnings of full-time male manual workers. This is somewhat higher than the average annual income of taxpayers as many people are not paid for 52 full weeks' work in a year.