§ Dr. McDonaldasked the Chancellor of the Exchequer if he will update, to take account of the 1985 Budget, the information on income tax reductions provided in his reply of 4 April 1984 to the hon. Member for Oldham, West (Mr. Meacher), Official Report, columns 542–44.
§ Mr. Moore[pursuant to his reply, 28 March 1985]: The table shows the reductions in income tax liabilities at 1985–86 income levels of the proposed 1985–86 allowances, thresholds and rates compared with an indexed 1978–79 regime. For the comparison, the 1978–79 allowances and thresholds have been indexed in line with the increase in the RPI between December 1977 and December 1984. As child tax allowances were being phased out in 1978–79 they have been excluded from the comparison.
It is not possible to provide useful estimates of the liabilities in 1985–86 for the 1978–79 regime without indexation since Inland Revenue records do not cover many of the people who would be brought into tax by such low levels of personal allowances. A partial analysis with incomplete coverage would be misleading.
Range of total income in 1985–86* Number of units paying tax in 1985–86 Reductions in income tax compared with 1978–79 indexed regime Amount Average per tax unit £ (million) £ million £ Under 5,000 3.9 250 †55 5,000–10,000 8.4 1,270 150 10,000–15,000 4.6 1,300 280 15,000–20,000 1.8 770 435 20,000–30,000 1.0 820 845 30,000–50,000 0.3 690 2,380 Over 50,000 0.09 1,150 12,780 Total 20.1 6,250 300 * All information is in terms of tax units—that is, married couples are counted as one and their incomes combined. † By reference to the estimated numbers who would be liable to pay tax under the indexed 1978–79 regime; this number is some 850,000 greater than the numbers paying tax in 1985–86 under the Budget proposals. The levels of the main allowances and thresholds, compared with the proposed 1985–86 values, would be:
706W
Personal allowances Indexed 1978–79 regime 1985–86 £ £ Single and wife's earned income allowance 1,875 2,205 Married man's allowance 2,925 3,455 Additional personal allowance 1,050 1,250
Personal allowances Indexed 1978–79 regime 1985–86 £ £ Aged single allowance 2,480 2,690 Aged married allowances 3,955 4.255 Aged income limit 7,700 8,800
Rate of tax (percentage) Bands of taxable income (£) Indexed 1978–79 regime 1985–86 25 0–1,450 — 30 — 0–16,200 33 1,451–15,300 — 40 15,301–17,300 16,201–19,200 45 17,301–19,300 19,201–24,400 50 19,301–21,300 24,401–32,300 55 21,301–24,200 32,301–40,200 60 24,201–27,100 Over 40,200 65 27,101–31,000 — 70 31,001–35,800 — 75 35,801–46,300 — 83 Over 46,300 —
Investment Income Surcharge: Indexed 1978–79 regime Bands of net investment income (£) Non-aged Aged Rate of surcharge (percentage) 0–3,250 0,4,800 Exempt 3,251–4,300 4,801–5,800 10 Over 4,300 Over 5,800 15 Investment income surcharge was abolished in 1984–85.