§ Mr. Frank Fieldasked the Chancellor of the Exchequer if he will list for 1978–79 and for the latest available date the revenue cost of granting tax relief for (i) life assurances, (ii) mortgage tax relief, (iii) approved pension schemes, (iv) employers' contributions to funded pension schemes, (v) retirement annuity premiums, (vi) age allowance and (vii) capital gains exemption for selling main residence; if he will express the growth in each of these totals in terms of a percentage increase in (a) money terms and (b) real terms; and if each set of data for both points in time could be expressed as a percentage of total Government revenue.
§ Mr. Moore[pursuant to his reply, 19 March 1986, c. 222–23]: The information for 1978–79 and the latest year, for which comparable data are available, is as follows: 1985–86 for all items except (iii) and (iv) where data relate to 1984–85. The figures represent the reduction in tax liability resulting from the existence of the reliefs; they should not be interpreted as the tax yields from withdrawing each relief.
£ million 1978–79 1985–86 (i) Life assurance 260 640 (ii) Mortgage interest 1,258 4,750 (iii) Approved pension schemes 450 1,750 (iv) Employers' contributions to funded pension schemes 1,200 1,950 (v) Retirement annuity premiums 70 325 (vi) Age allowance 265 425 (vii) Capital gains exemptions for selling main residence 1,500 2,500
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Percentage change—1978–79 to 1985–86 In money terms In real terms* (i) Live assurance 146 31 (ii) Mortgage interest 278 102 (iii) Approved pension schemes †289 †120 (iv) Employers' contributions to funded pension schemes †62 †-8 (v) Retirement annuity premiums 364 148 (vi) Age allowance 60 -15 (vii) Capital gains exemptions for selling main residence 67 -11 * By reference to movements in the retail prices index. † 1984–85.
As percentage of government revenue* 1978–79 1985–86 (i) Life assurance 0.6 0.7 (ii) Mortgage interest 3.1 4.9 (iii) Approved pension schemes 1.1 †1.9 (iv) Employers' contributions to funded pension schemes 2.9 †2.1 (v) Retirement annuity premiums 0.2 0.3 (vi) Age allowance 0.6 0.4 (vii) Capital gains exemptions for selling main residence 3.6 2.6 * Inland Revenue taxes, Customs and Excise duties, VED, NIS and royalties. † 1984–85. Notes for items:—
- (i) Life assurance premium relief was abolished for contracts made on or after 14 March 1984. Costs are net of the public expenditure element.
- (ii) Includes the cost of the former option mortgage scheme which was subsumed under the arrangements for giving mortgage interest relief at source (MIRAS) from April 1983 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) (iii) 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 1977–78, Appendix 15). The latest comparable estimate is for 1984–85. 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 cost of the exemption from Capital Gains tax is not known.
Costs of three of the components of pensions reliefs for 1985–86 are shown below. The total cost of tax reliefs for pension schemes cannot be calculated by
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Multiple of average earnings Half Two-thirds One Five Ten (a) (b) (a) (b) (a) (b) (a) (b) (a) (b) Single 1978–79 23.5 100.0 27.5 100.0 31.5 100.0 52.2 100.0 67.5 100.0 1979–80 22.9 102.6 26.3 103.4 29.7 104.4 42.8 121.6 51.4 151.8 1980–81 24.7 103.5 27.7 104.9 30.7 106.3 44.3 122.5 52.1 154.6 1981–82 26.9 100.1 29.6 101.7 32.3 103.5 46.4 117.3 53.2 150.5 1982–83 27.3 100.3 30.1 101.7 33.0 103.2 45.9 119.3 53.0 152.5 1983–84 27.0 104.6 30.0 105.8 33.0 107.1 45.1 125.7 52.5 159.6 1984–85 26.5 108.4 29.6 109.5 32.7 110.7 45.3 129.0 52.6 164.0 1985–86 26.3 110.9 29.5 111.9 32.6 113.1 45.5 131.0 52.8 166.8 1986–87 25.8 115.3 28.9 116.7 31.9 118.2 45.7 135.1 52.8 172.3 Married 1978–79 16.0 100.0 21.9 100.0 27.8 100.0 50.5 100.0 66.5 100.0 1979–80 16.0 101.7 21.1 102.7 26.3 103.8 41.5 120.2 50.7 149.6 1980–81 17.9 102.7 22.6 104.1 27.3 105.7 42.9 121.1 51.5 152.3 1981–82 20.8 98.7 25.0 100.5 29.3 102.5 45.2 115.8 52.6 148.1 1982–83 20.8 99.4 25.3 100.9 29.8 102.5 44.6 118.0 52.3 150.2 1983–84 20.1 104.1 24.9 105.3 29.6 106.7 43.7 124.4 51.9 157.3 1984–85 19.3 108.3 24.2 109.3 29.2 110.5 43.9 127.8 51.9 161.8 summing the costs of the individual reliefs since this would imply a considerable degree of multiple taxation.
Cost of Reliefs for:— 1985–86 £ million Employees' contributions to funded pension schemes 1,400 Pension funds' investment income (excluding capital gains for which no reliable estimate is available) 3,500 Lump sums on retirement (assuming relief at the basic rate) 1,000 (iv) Calendar year series. Latest comparable data are for 1984–85. These estimates are particularly tentative and are on the basis that employers' contributions are not taxed as a benefit in kind of the employee.
(vi) Cost of the excess of age allowances over and above the corresponding single person's and married man's allowances.