§ Mr. Meacherasked the Chancellor of the Exchequer what has been the level of tax reliefs granted for life assurance, mortgage interest, approved pension schemes, employers' contributions to approved pension schemes, retirement annuity and age allowance for each year since 1979; and what has been the annual percentage increase in each case and the total percentage increase 1979–85 in each case.
§ Mr. Moore[pursuant to his reply, 15 January 1986, c. 593]: The information is as follows. The figures represent the reduction in tax liabilities resulting from the existence of the reliefs.
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Life assurance* Mortgage interest Approved pension schemes║ Employers' contributions to funded pension scheme¶ Retirement annuity premiums• Age allowances■ Change over previous year (Per cent.) (Per cent.) 1979–80 65 31 11 17 57 9 1980–81 23 35 40 14 .. 28 1981–82 -2 4 43 13 .. 5 1982–83 10 6 10 3 .. 15 1983–84 21 †-2 27 3 .. 9 1984–85 3 27 25 3 .. -14 1985–86 -10 36 .. .. .. 1 Change 1978–79 to 1985–86 (Per cent.) (Per cent.) 146 †278 ║189 ¶62 364 60 .. not available.
* Life assurance premium relief was abolished for contracts made on or after 14 March 1984. Costs are net of the public expenditure element.
† The former option mortgage scheme was subsumed under the arrangements for giving mortgage interest relief at source (MIRAS) from April 1983. The 1983–84 cost is not therefore directly comparable with that for 1982–83. The percentage increase from 1978–79 to 1985–86 is based on the combined cost of mortgage interest relief and option mortgages. The cost of the option mortgage scheme was as follows:
£ million 1978–79 148 1979–80 189 1980–81 228 1981–82 262 1982–83 306 1983–84 ‡17 ‡ For claims in respect of earlier years.
■ Composite estimates published in the relevant public expenditure White Paper on the basis set out in the Inland Revenue's note of February 1978 to the General Sub-Committee of the Expenditure Committee (second report 1977–79, appendix 15). A comparable estimate for 1985–86 is not available. This approach to the calculation of the cost of pension scheme reliefs included the cost of relief for employees' contributions and funds' investment income net of tax paid on pensions received plus tax in excess of the basic rate on the estimated income element of pensions received. The 1984–85 estimate of cost on this basis is 189 per cent. higher than the 1978–79 figure.
Costs of three of the components of pensions reliefs for 1983–84 onwards are shown below. The total cost of tax reliefs for pension schemes cannot be calculated by summing the costs of the individual reliefs since this would imply a considerable degree of multiple taxation.
1983–84 1984–85 1985–86 £ million £ million £ million Employees' contributions to funded pension schemes 1,100 1,250 1,400 Pension funds' investment income (excluding capital gains for which no reliable estimate is available) 2,250 2,500 3,500 Lump sums on retirement (assuming relief at the basic rate) 650 900 1,000 ¶ Calendar year series. These estimates are particularly tentative and are on the basis that employers' contributions are not taxed as a benefit in kind of the employee. The 1984–85 estimate is 62 per cent. higher than the 1978–79 figure.
• Estimates for 1978–79, 1979–80 and 1985–86 are the costs of tax relief on retirement annunity premiums. For 1980–81 to 1984–85, estimates on a comparable basis are not readily available.
■ Costs of the excess of age allowances over and above the corresponding single person's and married man's allowances.