Income Tax (Hansard, 8 February 1988)

§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer what additional annual income net of tax and national insurance would result from (a) a 2p cut in the basic rate of income tax and (b) the reduction of all high rate income tax bands to 40 per cent. for (i) a person, (ii) an income tax payer, (iii) a household and (iv) average family of four.

§ Mr. Norman Lamont
[holding answer 29 January 1988]: The effects of the proposed changes depend on the level of income. Estimates are given in the tables, for selected specimen incomes. The income tax changes are compared with the 1987–88 tax regime indexed to 1988–89 according to the statutory provisions and disregard any changes in the social security income related benefits to which the family may be entitled. The number of children in a family would not affect the tax liability.
by the Treasury from taxpayers earning (a) between £20,000 and £50,000 and (b) more than £50,000 as a result of beneficial loans from employers;
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(2) what was the estimated income tax forgone in 1986–87 by the Treasury from taxpayers earning (a) between £20,000 and £50,000 and (b) more than £50,000 as a result of loans from an employer to purchase a residence;
(3) what was the estimated income tax forgone in 1986–87 by the Treasury from taxpayers earning (a) between £20,000 and £50,000 and (b ) more than £50,000 as a result of loans from an employer to purchase a car.

§ Mr. Norman Lamont
[holding answers 4 February 1988]: Employees earning at a rate of £8,500 or more per year and all directors who receive an interest-free or cheap loan from their employer are liable to income tax on the difference between interest calculated at the official rate and the actual interest paid. When the benefit of the cheap loan is less than £200 in the year, no tax is charged. Estimates of the cost of this tax exemption are not available.
Tax is not charged if the loan is such that any interest paid on it would be eligible for tax relief—for example, qualifying loans up to £30,000 to purchase a main residence. It is estimated that the total income tax forgone as a result of this exemption is around £100 million, but I regret that it is not possible to estimate the cost attributable to those earning over £20,000 per year.

§ Mr. Darling
To ask the Chancellor of the Exchequer what was the estimated income tax forgone in 1986–87 by the Treasury from taxpayers earning(a) between £20,000 and £50,000 and (b) more than £50,000 as a result of personal equity plans.

§ Mr. Norman Lamont
[holding answer 4 February 1988]: The income tax relief on personal equity plans is in respect of dividend and interest payments on investments. Since personal equity plans were not available until January 1987, the income tax forgone in 1986–87 was negligible.

§ Mr. Darling
To ask the Chancellor of the Exchequer, what was the estimated income tax forgone in 1986–87 by the Treasury from taxpayers earnings(a) between £20,000 and £50,000 and (b) more than £50,000 as a result of savings-related share option schemes.

§ Mr. Norman Lamont
[holding answer 4 February 1988]: The total cost of income tax forgone in 1986–87 as a result of approved savings-related share option schemes is estimated at £50 million. I regret that it is not possible to subdivide this between different income groups.

§ Mr. Darling
To ask the Chancellor of the Exchequer, what was the estimated income tax forgone in 1986–87 by the Treasury from taxpayers earnings(a) between £20,000 and £50,000 and (b) more than £50,000 as a result of the 1984 share option scheme.

§ Mr. Norman Lamont
[holding answer 4 February 1988]: The cost of income tax forgone in 1986–87 as a result of approved Finance Act 1984 share option schemes is negligible since options must generally be held for at least three years in order to qualify for relief.