Budget (Hansard, 29 April 1988)

§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer if he will specify the distribution of gains in the Budget from each item where tax changes were made at other than normal indexation, according to income bands as follows: less than £5,000 per year; £5,000 to £7,500; £7,500 to £10,000; £10,000 to £12,500; £12,500 to £15,000; £15,000 to £20,000; £20,000 to £30,000; £30,000 to

Reduction in income tax liability in 1988–89 compared with indexation of the 1987–88 income tax regime

Range of total income Tax units¹ as a percentage of total liable to tax Increase in personal allowances Increase in basic rate limit Reduction in basic rate Abolition of higher rates above 40 per cent. Budget proposals for allowances, rates and thresholds

per cent. Amount £ million Amount £ million Amount £ million Amount £ million Amount £ million As a percentage of total per cent.

Less than £5,000 12.2 70 — 50 — 120 2.0

£5,000 to £7,500 17.7 110 — 210 — 320 5.3

£7,500 to £10,000 15.9 110 — 300 — 410 6.8

£10,000 to £12,500 13.8 120 — 350 — 470 7.8

£12,500 to £15,000 10.9 100 — 350 — 450 7.4

£15,000 to £20,000 13.8 140 — 590 — 730 12.0

£20,000 to £30,000 10.9 130 40 710 10 890 14.7

£30,000 to £50,000 3.7 60 60 330 310 760 12.7

Above £50,000 1.1 20 20 110 1,750 1,900 31.3

TOTAL 100.0 860 120 3,000 2,070 6,050 100.0

¹ Counting married couples as one and combining their incomes. Under the Budget proposal it is estimated that 20.9 million tax units will pay tax in 1988–89.

§ Mr. Kirkwood
To ask the Chancellor of the Exchequer if he will update, to take account of the 1988 Budget, the information on tax changes contained in his reply of 21 October 1986, to the hon. Member for Oldham, West (Mr. Meacher),Official Report, columns 807–8.

§ Mr. Meacher
To ask the Chancellor of the Exchequer if he will update his answer to the hon. Member for Oldham, West,Official Report, 25 January, columns 79–82, regarding income gains and losses from successive Budgets, in the light of his latest budget.
324W
£50,000; and above £50,000; and if he will indicate the percentage of total tax changes accruing to each group and the percentage of the total numbers of taxpayers that each group comprises.

§ Mr. Norman Lamont
[holding answer 12 April 1988]: The table shows the estimated change in income tax liability for individuals at 1988–89 levels of income resulting from the main Budget proposals compared with indexation of the 1987–88 income tax regime.

§ Mr. Norman Lamont
[holding answer 12 April 1988]: The information is in the tables. For each financial year shown, the tables compare the yield from the tax regime in that year with the 1978–79 tax regime. All the estimates are based on a provisional 1988–89 income base projected from the 1985–86 survey of personal incomes and all tax regimes have been indexed to 1988–89 levels according to the statutory formula. The comparisons therefore allow 325W for budgetary changes in income tax since 1978–79 but not for changes in definition or any other factors which might affect the income base.

Reductions( + )/increase( — ) in income tax compared with 1978–79 indexed regime

£ million

Range of total income in 1988–89 £ Number units paying tax in 1988–89 (miilion) 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89

Under 5,000 2.6 180 70 -280 -240 -30 90 190 220 280 400

5,000 to 10,000 7.0 1,050 600 -310 -210 310 650 960 1,230 1,760 2,490

10,000 to 15,000 5.2 1,380 1,000 200 290 740 1,120 1,420 1,780 2,510 3,430

15,000 to 20,000 2.9 1,130 850 320 380 690 970 1,170 1,470 2,080 2,810

20,000 to 30,000 2.3 1,510 1,230 500 590 1,020 1,360 1,550 1,910 2,620 3,510

30,000 to 50,000 0.8 1,350 1,170 620 680 990 1,280 1,380 1,530 1,820 2,580

50,000 to 70,000 0.1 680 620 440 460 560 700 720 740 780 1,250

Over 70,000 0.1 1,750 1,700 1,540 1,560 1,640 2,060 2,070 2,080 2,100 3,530

Total 20.9 9,010 7,220 3,020 3,510 5,910 8,220 9,470 10,960 13,940 20,000

Average gain/loss( — ) per tax unit (£ per annum)

Range of total income in 1988–89 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89

£

under 5,000¹ 50 20 -80 -70 -10 30 60 60 80 120

5,000 to 10,000¹ 150 80 -40 -30 40 90 130 170 240 350

10,000 to 15,000 270 190 40 60 140 220 270 340 480 660

15,000 to 20,000 390 300 110 130 240 340 410 510 720 980

20,000 to 30,000 660 540 220 260 450 600 680 840 1,150 1,540

30,000 to 50,000 1,740 1,500 800 870 1,270 1,650 1,770 1,970 2,340 3,310

50,000 to 70,000 4,990 4,560 3,240 3,380 4,120 5,150 5,290 5,440 5,740 9,160

over 70,000 18,620 18,090 16,380 16,600 17,450 21,910 22,020 22,130 22,340 37,550

Total 410 330 140 160 270 370 430 500 630 910

Note:
All information is in terms of tax units—that is married couples are counted as one and their incomes combined.
¹ Average gains are calculated by reference to the estimated number would be liable to pay tax under the indexed 1978–79 regime; this number is some 1,100.000 greater than the numbers paying tax in 1987–88, some 900,000 in the income range below £5,000 and 200,000 in the range £5,000 to £10,000.

Reduction in income tax liability in 1988–89 compared with indexation of the 1987–88 income tax regime
Range of total income	Tax units¹ as a percentage of total liable to tax	Increase in personal allowances	Increase in basic rate limit	Reduction in basic rate	Abolition of higher rates above 40 per cent.	Budget proposals for allowances, rates and thresholds
	per cent.	Amount £ million	Amount £ million	Amount £ million	Amount £ million	Amount £ million	As a percentage of total per cent.
Less than £5,000	12.2	70	—	50	—	120	2.0
£5,000 to £7,500	17.7	110	—	210	—	320	5.3
£7,500 to £10,000	15.9	110	—	300	—	410	6.8
£10,000 to £12,500	13.8	120	—	350	—	470	7.8
£12,500 to £15,000	10.9	100	—	350	—	450	7.4
£15,000 to £20,000	13.8	140	—	590	—	730	12.0
£20,000 to £30,000	10.9	130	40	710	10	890	14.7
£30,000 to £50,000	3.7	60	60	330	310	760	12.7
Above £50,000	1.1	20	20	110	1,750	1,900	31.3
TOTAL	100.0	860	120	3,000	2,070	6,050	100.0
¹ Counting married couples as one and combining their incomes. Under the Budget proposal it is estimated that 20.9 million tax units will pay tax in 1988–89.

Reductions( + )/increase( — ) in income tax compared with 1978–79 indexed regime
£ million
Range of total income in 1988–89 £	Number units paying tax in 1988–89 (miilion)	1979–80	1980–81	1981–82	1982–83	1983–84	1984–85	1985–86	1986–87	1987–88	1988–89
Under 5,000	2.6	180	70	-280	-240	-30	90	190	220	280	400
5,000 to 10,000	7.0	1,050	600	-310	-210	310	650	960	1,230	1,760	2,490
10,000 to 15,000	5.2	1,380	1,000	200	290	740	1,120	1,420	1,780	2,510	3,430
15,000 to 20,000	2.9	1,130	850	320	380	690	970	1,170	1,470	2,080	2,810
20,000 to 30,000	2.3	1,510	1,230	500	590	1,020	1,360	1,550	1,910	2,620	3,510
30,000 to 50,000	0.8	1,350	1,170	620	680	990	1,280	1,380	1,530	1,820	2,580
50,000 to 70,000	0.1	680	620	440	460	560	700	720	740	780	1,250
Over 70,000	0.1	1,750	1,700	1,540	1,560	1,640	2,060	2,070	2,080	2,100	3,530
Total	20.9	9,010	7,220	3,020	3,510	5,910	8,220	9,470	10,960	13,940	20,000

Average gain/loss( — ) per tax unit (£ per annum)
Range of total income in 1988–89	1979–80	1980–81	1981–82	1982–83	1983–84	1984–85	1985–86	1986–87	1987–88	1988–89
£
under 5,000¹	50	20	-80	-70	-10	30	60	60	80	120
5,000 to 10,000¹	150	80	-40	-30	40	90	130	170	240	350
10,000 to 15,000	270	190	40	60	140	220	270	340	480	660
15,000 to 20,000	390	300	110	130	240	340	410	510	720	980
20,000 to 30,000	660	540	220	260	450	600	680	840	1,150	1,540
30,000 to 50,000	1,740	1,500	800	870	1,270	1,650	1,770	1,970	2,340	3,310
50,000 to 70,000	4,990	4,560	3,240	3,380	4,120	5,150	5,290	5,440	5,740	9,160
over 70,000	18,620	18,090	16,380	16,600	17,450	21,910	22,020	22,130	22,340	37,550
Total	410	330	140	160	270	370	430	500	630	910