Reliefs and Allowances (Hansard, 1 May 1987)

§ Mr. Gordon Brown

asked the Chancellor of the Exchequer (1) if he will show tax and national insurance in 1987–88 as a proportion of earnings, together with a breakdown of the reliefs and allowances applicable in the cases of a married man with earnings of £100,000 per annum, making an annual investment of £40,000 from his earnings under the business expansion scheme and claiming tax relief on (a) a mortgage loan of £30,000, assuming a monthly interest payment of £281.25, (b) the maximum contribution to a personal pension scheme from 4 January 1988, having no contracted-out employer's scheme prior to that date, (c) a life insurance policy taken

	Reliefs and allowances (£ per year) set against income
Gross Earnings	Personal allowance	Business Expansion Scheme	Mortgage Interest Relief	Relief on Personal Pension Scheme²	Life Assurance Relief³	Tax liability	National Insurance¹ Contributions	Tax and NIC as a proportion of earnings
£ per year					£ per year	£ per year	£ per year	per cent.
Married man
30,000	3,795	5,000	3,375	1,312.50	30	4,429.73	1,380.60	19.4
100,000	3,795	40,000	3,375	4,375.00	150	20,581.00	1,380.60	22.0
100,000	3,795	—	—	—	—	49,381.00	1,380.60	50.8
11,820⁴	3,795	—	—	—	—	2,166.75	1,063.80	27.3
Single person
5,200⁵	2,425	—	—	—	—	749.25	468.00	23.4
¹At contracted-in rates. The difference between the employee's contracted-in and contracted-out payments (paid into the personal pension where this is in operation) for the three months of the personal pension scheme is £71.55.
²i.e. 17.5 per cent of earnings for the three months remaining of the tax year after 4th January 1988.
³reduction in tax due at 15 per cent, of the annual premium.
⁴i.e. £227.30 per week which is estimated average earnings for a man paid at adult rates in 1987–88.
⁵i.e. £100 per week.

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out before 13 March 1984 and with an annual premium of £1,000 and (d) the maximum monthly tax-free investment into a personal equity plan;

(2) if he will show tax and national insurance in 1987–88 as a proportion of earnings, together with a breakdown of the reliefs and allowances applicable in the case of a married man with earnings of £30,000 per annum, and making an annual investment from his earnings of £5,000 under the business expansion scheme as well as claiming tax relief on (a) a mortgage loan of £30,000 assuming a monthly interest payment of £281.25, (b) the maximum contribution to a personal pension scheme from 4 January 1988, having no contracted-out employer's scheme prior to that date, (c) a life insurance policy taken out before 13 March 1984 and with an annual premium of £200 and (d) the maximum monthly tax-free investment into a personal equity plan;

(3) if he will show tax and national insurance in 1987–88 as a proportion of earnings, together with a breakdown of the reliefs and allowances applicable in the cases of (a) a married man with earnings of £100,000 per annum, (b) a married man on the level of average male earnings assumed for 1987 and (c) a single person earning £100 per week.

§ Mr. Norman Lamont

[pursuant to his replies, 10 April 1987, c. 449–50]: The information is in the table. It has been assumed that there are no wife's earnings and that the taxpayer has no relief or allowance available other than those specified.

National insurance contributions are assumed to be paid at contracted-in rates. Where an employee has made the maximum contribution to a personal pension scheme, he and his employer pay NI contributions at the standard contracted-in rate and the Department of Health and Social Security pays minimum contributions to his personal pension scheme equivalent to the difference between the contracted-out and contracted-in rates of NI contributions for both employer and employee. The maximum contribution to a personal pension plan is 17½ per cent. of earnings (assuming the taxpayer is aged under 50).

The maximum investment in a personal equity plan of £2,400 per annum is not relieved against income tax and therefore does not affect the calculation of income tax liability. Tax relief is given on dividends reinvested in a PEP scheme, and on capital gains made on mature plans.