Pensions (Hansard, 9 November 1988)

§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer whether the state pension for wives and the pension of a widow based on an occupational pension is treated as earned income for income tax purposes; and if he will publish in theOfficial Report his estimate of the number of earning and non-earning wives with income in 1988–89 by range of wife's total income up to the level of the personal allowance and thereafter by steps of £1,000 from £3,000 to £10,000 and subsequent steps to £50,000.

§ Mr. Norman Lamont
National insurance retirement pensions for wives and occupational pensions are both treated as earned income for tax purposes. Available estimates are in the tables. They are based on a projection of the 1985–86 survey of personal incomes and are therefore provisional.

Distribution of wives total income, 1988–89

(thousands)

Range of total income¹ of wife (lower limit) Number of earning wives² Number of non-earning wives³

£ pa '000 '000

1 2,760 3,210

2,605 400 20

3,000 860 30

4,000 690 10

5,000 500 10

6,000 560 5

7,000 420 5

8,000 370 5

9,000 200 . .

10,000 540 5

15,000 110 5

20,000 50 5

30,000 20 . .

All ranges 7,480 3,315

¹ Wives' earnings plus wives' investment income.

² Excluding some wives with earnings below the PAYE reporting limit and self-employed wives making a net loss.

³ Including some wives with earnings below the PAYE reporting limit and self-employed wives making a net loss.

. . Less than 3,000.

§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer what is his estimate of the revenue yield at current income and tax rates from withdrawing tax relief on the employee's actual and notional pension contributions for tax purposes; and if he will provide a comparable figure for the self-employed, including partnerships, and so on.
238W

§ Mr. Norman Lamont
[holding answer 3 November 1988]: The available information was given in my reply to the hon. Member on 29 July 1988 at column 494.

§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer what is his estimate of the annual pension contribution required by an employer and an employee, respectively, as a percentage of earnings to provide a pension equal to the maximum allowed under Inland Revenue rules in the event of all tax privileges being withdrawn; and if he will state the revenue yield from the withdrawal together with the revenue loss from exempting such pensions from tax on the basis that the amount of the pension is not excluded from taxable income in estimating liability to higher rate tax.

§ Mr. Norman Lamont
[holding answer 3 November 1988]: I regret that estimates cannot be made on the basis of the information provided.

§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer whether he will publish in theOfficial Report his estimate of the proportion of single persons and married couples with a state pension who also have an occupational pension together with a table showing by income range the number in each case of those of less than pensionable age who made pension contributions under the national insurance scheme towards an occupational pension.

§ Mr. Norman Lamont
[holding answer 3 November 1988]: I regret that this information is not available.

§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer what is his estimate of(a) actual and (b) notional pension contributions made by employers for themselves and their employees in the current financial year together with his estimate of the direct revenue yield in each case from withdrawing relief for such contributions as a business expense; and if he will add his best estimate of the United Kingdom profits after tax out of which such payments would be made.

§ Mr. Norman Lamont
[holding answer 3 November 1988]: The available information is as follows:

Estimated value for 1988–89 of employers' pension contributions to occupational pension funds

£ billion

Funded schemes 7

Notionally funded schemes 2

If taxable profits were increased by the withdrawal of this relief and there were no behavioural effects the Revenue yield would increase by about £2 billion. The latest available figure of profits and tax are published in tables 5.1 and 6.2 of the national income Blue Book.

§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer whether he will publish in theOfficial Report tables showing by income band for single persons and one-earner and two-earner married couples the direct gain to the Revenue from, respectively, (a) abolishing the relief for the employees' pension contributions and (b) including as part of income the employer's pension contributions.

§ Mr. Norman Lamont
[holding answer 3 November 1988]: I regret that the information is not available.

Distribution of wives total income, 1988–89
(thousands)
Range of total income¹ of wife (lower limit)	Number of earning wives²	Number of non-earning wives³
£ pa	'000	'000
1	2,760	3,210
2,605	400	20
3,000	860	30
4,000	690	10
5,000	500	10
6,000	560	5
7,000	420	5
8,000	370	5
9,000	200	. .
10,000	540	5
15,000	110	5
20,000	50	5
30,000	20	. .
All ranges	7,480	3,315
¹ Wives' earnings plus wives' investment income.
² Excluding some wives with earnings below the PAYE reporting limit and self-employed wives making a net loss.
³ Including some wives with earnings below the PAYE reporting limit and self-employed wives making a net loss.
. . Less than 3,000.

Estimated value for 1988–89 of employers' pension contributions to occupational pension funds
	£ billion
Funded schemes	7
Notionally funded schemes	2