Incomes (Hansard, 5 July 1988)

§ Mr. Frank Field
To ask the Chancellor of the Exchequer what was the share of pre and post-tax income going to the top(a) 1 per cent. and (b) 5 per cent. of income recipients from 1970–71 to 1988–89.

§ Mr. Norman Lamont
[holding answer 24 June 1988]: Available information is given in the table. The quantile groups have been determined by reference to the distribution of income before and after tax of those single people and married couples for whom the Inland Revenue has records in each year. The figures are based on the

Tax units receiving mortgage interest relief by range of total income 1988–89

Range of total income Number of tax units¹ with mortgage interest relief² Average value of relief per mortgagor Total cost of relief

thousands £ £ million

Up to £7,000 1,030 320 330

£7,000 to £10,000 960 400 380

£10,000 to £13,000 1,480 460 680

£13,000 to £16,000 1,400 480 680

£16,000 to £19,000 1,130 490 560

£19,000 to £22,000 810 500 410

£22,000 to £25,000 620 510 320

Over £25,000 1,170 760 890

Total 8,600 490 4,250

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annual surveys of personal incomes. Estimates for 1986–87 and later years are not available on the same basis. However, estimates of the income before and after tax of the top 1 per cent. and top 5 per cent. of income tax payers were given in my reply to the hon. Member for Newcastle upon Tyne, East (Mr. Brown) on 28 June at column 188.

Income before and after tax oj the top 1 per cent, and top 5 per cent, of income recipient's¹

Percentages

Top 1 per cent. Top 5 per cent.

Year Before tax After tax Before tax After tax

1970–71 6.3 4.1 16.5 13.4

1971–72 6.1 4.2 16.1 13.6

1972–73 5.9 4.1 15.7 12.9

1973–74 6.2 4.2 15.9 12.9

1974–75 5.8 3.7 15.7 12.8

1975–76 5.4 3.6 15.1 12.8

1976–77 5.2 3.6 15.3 12.8

1977–78 5.2 3.6 15.2 12.8

1978–79 5.1 3.6 15.0 12.9

1979–80 5.3 4.2 15.6 13.8

1980–81 5.5 4.3 16.0 14.1

1981–82 5.7 4.4 16.5 14.4

1982–83 5.9 4.5 16.7 14.6

1983–84 5.8 4.5 16.9 14.8

1984–85 5.7 4.6 17.2 15.1

1985–86 6.1 4.7 17.3 15.0

¹ Counting married couples as one and combining their incomes.

§ Mr. Soley
To ask the Chancellor of the Exchequer (1) if he will publish a table showing the average annual value of mortgage interest tax relief in Great Britain at the latest date available to recipients(a) with incomes below £7,000 a year, (b) with incomes between £7,000 and £10,000 a year, (c) with incomes between £10,000 and £13,000 a year, (d) with incomes between £13,000 and £16,000 a year, (e) with incomes between £16,000 and £19,000 a year, (f) with incomes between £19,000 and £22,000 a year, (g) with incomes between £22,000 and £25,000 a year and (h) with incomes above £25,000 a year, and the number of recipients in each group;
(2) if he will publish a table showing for each income group the estimated number of mortgagors receiving mortgage interest tax relief in 1988–89, the average annual value of the relief and the total cost for each group.

§ Mr. Norman Lamont
[holding answers 27 June 1988]: Provisional estimates for the United Kingdom are given in the table. These are based on projections to 1988–89 of information in the 1985–86 survey of personal incomes and the 1985 family expenditure survey. The estimates include mortgages formerly under the option mortgage scheme which are now subsumed under MIRAS.
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¹ Single persons and married couples
² Including about ½ million non-taxpaying tax units

§ Mr. Soley
To ask the Chancellor of the Exchequer what was the average annual value of mortgage interest tax relief(a) to first-time buyers and (b) to all recipients (i) in Great Britain and (ii) in each region in each year from 1979 to 1987.

Average value of relief per mortgagor (£)

1979–80 1980–81 1981–82 1982–83

Northern 215 285 290 305

Yorkshire and Humberside 200 265 270 285

North West 190 275 260 285

East Midlands 225 290 280 285

West Midlands 235 295 310 335

East Anglia 225 315 355 355

Greater London 310 395 440 420

Other South East 290 395 430 415

South West 240 350 355 335

Wales 195 285 335 295

Scotland 265 370 375 390

Northern Ireland 220 350 335 300

United Kingdom 245 335 350 350

Following the introduction of MIRAS in April 1983, regional information on the cost of mortgage interest relief cannot he extracted from Inland Revenue records. The regional distribution of mortgage interest can be estimated from the family expenditure survey (FES) but, as the sample size for the FES is relatively small, it is not possible to provide robust estimates of regional trends for the period after 1982–83. Accordingly. the table shows the average value of relief for 1983–84 to 1987–88 for the United Kingdom only.

United Kingdom Average value of relief (£)¹

Number

1983–84 370

1984–85 460

1985–86 595

1986–87 580

²1987–88 575

¹ Includes the cost of mortgage interest relief given to non-taxpayers.

² Provisional.

§ Mr. Soley
To ask the Chancellor of the Exchequer if he will publish a table of the total cost of mortgage tax relief in Great Britain in each of the years from 1979 to 1987, indicating the amount of spending on mortgage tax relief at each of the higher tax rates of 40 per cent., 50 per cent. and 60 per cent. in each of these years.

§ Mr. Norman Lamont
[holding answer 27 June 1988]: Estimates for the United Kingdom of the total cost of mortgage interest tax relief and the cost of relief at rates in excess of basic rate are given for 1979–80 to 1987–88.

Cost of mortgage interest relief £ million Cost of relief at excess over basic rate £ million

1979–80 1,450 90

1980–81 1,960 130

1981–82 2,050 190

1982–83 2,150 170

1983–84 ²2,780 160

1984–85 ²3,580 200

1985–86 ²4,750 260

1986–87 ²4,750 ¹290

1987–88 ²4,850 ¹370

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§ Mr. Norman Lamont
[holding answer 27 June 1988]: Estimates for the years 1979–80 to 1982–83 have been derived from the annual surveys of personal incomes and are given in the table. I regret that the information on first-time buyers is not available.
¹ Provisional.
² Includes mortgages formerly under the option mortgage scheme.
The following table shows the cost of relief at excess over basic rate in 1987–88 broken down by the marginal tax rate of the beneficiaries of this relief. A breakdown for other years could be provided only at disproportionate cost.

Cost of mortgage interest relief in excess of basic rate in 1987–88

Marginal tax rate percent. £ million

27 45

40 60

45 80

50 65

55 40

60 80

Total 370

NoteBasic rate taxpayers who would be liable at higher rates if mortgage interest relief were restricted to basic rate relief only.

§ Mr. Soley
To ask the Chancellor of the Exchequer if he will publish a table giving the cost of mortgage tax relief for each year from 1967–68 to 1987–88, shown at 1987 prices.

§ Mr. Norman Lamont
[holding answer 27 June 1988]: The estimated costs of mortgage interest tax relief in the United Kingdom, at 1987–88 prices, are shown in the table. Figures for 1983–84 onwards include the cost of relief given to non-taxpayers.

Cost of mortgage tax relief at 1987–88 prices¹

United Kingdom

£ million

1967–68 1,170

1968–69 1,200

1969–70 1,370

1970–71 1,550

1971–72 1,540

1972–73 1,700

1973–74 2,150

1974–75 2,480

1975–76 2,560

1976–77 2,710

1977–78 2,270

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£ million

1978–79 2,240

1979–80 2,520

1980–81 2,930

1981–82 2,750

1982–83 2,690

1983–84 3,330

1984–85 4,080

1985–86 5,110

²1986–87 4,950

²1987–88 4,850

¹ Revalorised with respect to the retail prices index.

² Provisional.

Tax units receiving mortgage interest relief by range of total income 1988–89
Range of total income	Number of tax units¹ with mortgage interest relief²	Average value of relief per mortgagor	Total cost of relief
	thousands	£	£ million
Up to £7,000	1,030	320	330
£7,000 to £10,000	960	400	380
£10,000 to £13,000	1,480	460	680
£13,000 to £16,000	1,400	480	680
£16,000 to £19,000	1,130	490	560
£19,000 to £22,000	810	500	410
£22,000 to £25,000	620	510	320
Over £25,000	1,170	760	890
Total	8,600	490	4,250

Income before and after tax oj the top 1 per cent, and top 5 per cent, of income recipient's¹
Percentages
	Top 1 per cent.	Top 5 per cent.
Year	Before tax	After tax	Before tax	After tax
1970–71	6.3	4.1	16.5	13.4
1971–72	6.1	4.2	16.1	13.6
1972–73	5.9	4.1	15.7	12.9
1973–74	6.2	4.2	15.9	12.9
1974–75	5.8	3.7	15.7	12.8
1975–76	5.4	3.6	15.1	12.8
1976–77	5.2	3.6	15.3	12.8
1977–78	5.2	3.6	15.2	12.8
1978–79	5.1	3.6	15.0	12.9
1979–80	5.3	4.2	15.6	13.8
1980–81	5.5	4.3	16.0	14.1
1981–82	5.7	4.4	16.5	14.4
1982–83	5.9	4.5	16.7	14.6
1983–84	5.8	4.5	16.9	14.8
1984–85	5.7	4.6	17.2	15.1
1985–86	6.1	4.7	17.3	15.0
¹ Counting married couples as one and combining their incomes.

Average value of relief per mortgagor (£)
	1979–80	1980–81	1981–82	1982–83
Northern	215	285	290	305
Yorkshire and Humberside	200	265	270	285
North West	190	275	260	285
East Midlands	225	290	280	285
West Midlands	235	295	310	335
East Anglia	225	315	355	355
Greater London	310	395	440	420
Other South East	290	395	430	415
South West	240	350	355	335
Wales	195	285	335	295
Scotland	265	370	375	390
Northern Ireland	220	350	335	300
United Kingdom	245	335	350	350

United Kingdom Average value of relief (£)¹
	Number
1983–84	370
1984–85	460
1985–86	595
1986–87	580
²1987–88	575
¹ Includes the cost of mortgage interest relief given to non-taxpayers.
² Provisional.

	Cost of mortgage interest relief £ million	Cost of relief at excess over basic rate £ million
1979–80	1,450	90
1980–81	1,960	130
1981–82	2,050	190
1982–83	2,150	170
1983–84	²2,780	160
1984–85	²3,580	200
1985–86	²4,750	260
1986–87	²4,750	¹290
1987–88	²4,850	¹370

Cost of mortgage interest relief in excess of basic rate in 1987–88
Marginal tax rate percent.	£ million
27	45
40	60
45	80
50	65
55	40
60	80
Total	370

Cost of mortgage tax relief at 1987–88 prices¹
United Kingdom
	£ million
1967–68	1,170
1968–69	1,200
1969–70	1,370
1970–71	1,550
1971–72	1,540
1972–73	1,700
1973–74	2,150
1974–75	2,480
1975–76	2,560
1976–77	2,710
1977–78	2,270

	£ million
1978–79	2,240
1979–80	2,520
1980–81	2,930
1981–82	2,750
1982–83	2,690
1983–84	3,330
1984–85	4,080
1985–86	5,110
²1986–87	4,950
²1987–88	4,850
¹ Revalorised with respect to the retail prices index.
² Provisional.