Private Medical Insurance (Hansard, 19 February 1990)

§ Mr. Chris Smith
To ask the Chancellor of the Exchequer (1) what is the cost in(a) 1989–90 and (b) a full year of tax relief on private medical insurance; how many people benefit; and what proportion of these already have private medical insurance;
(2) how many people he expects to benefit in 1990–91 from the introduction of tax relief on private medical insurance; how many of these are pensioners; and what is the income distribution of those who gain.

§ Mr. Lilley
[holding answer 12 February 1990]: Tax relief on private medical insurance for the over-60s will not be available until April. The cost in 1989–90 will be nil, and in 1990–91 about £40 million. This estimate is based on the assumption that about 600,000 individuals, with 330,000 policies, are to benefit in the first year of the relief and that about 90 per cent. of these already have private medical insurance. In subsequent years, as take-up increases, this proportion is expected to fall and the amount of tax relief will rise. The further details requested are not available.

§ Mr. Chris Smith
To ask the Chancellor of the Exchequer (1) what would be the effect of indexing personal allowances(a) fully, (b) three quarters of full indexation, (c) half of full indexation, (d) quarter of what would be necessary for full indexation and (e) not indexing at all, on (i) tax revenue in both 1990–91 and in a full year, (ii) the average gain per person on incomes of £5,000, £10,000, £15,000, £20,000, £30,000, £40,000 and £50,000 plus and (iii) the number of people paying tax;
(2) what would be the effect of indexing personal allowances (a) fully, (b) three quarters of full indexation, (c) half of full indexation, (d) quarter of what would be necessary for full indexation and (e) not indexing at all, on a one-earner family of four on an income of £5,000, £10,000, £15,000, £20,000, £30,000, £40,000 and £50,000.

§ Mr. Lilley
[holding answer 12 February 1990]: Available information is given in the tables. All estimates

Table 4: Gain for one-earner family of four of increasing personal allowances and basic rate limit from their 1989–90 levels

Gain for one-earner family of four¹ under:

Income Full indexation ¾indexation ½indexation ¼indexation

£per annum £per annum £per annum £per annum £per annum

5,000 87.50 65.75 43.75 22.00

10,000 87.50 65.75 43.75 22.00

15,000 87.50 65.75 43.75 22.00

20,000 87.50 65.75 43.75 22.00

30,000 380.00 285.20 190.00 95.20

50,000 380.00 285.20 190.00 95.20

¹ Assumes the married man receives all the income and that he receives no other tax allowances and reliefs except for the personal allowance and the married couples allowance in 1990–91.

Table 4: Gain for one-earner family of four of increasing personal allowances and basic rate limit from their 1989–90 levels
	Gain for one-earner family of four¹ under:
Income	Full indexation	¾indexation	½indexation	¼indexation
£per annum	£per annum	£per annum	£per annum	£per annum
5,000	87.50	65.75	43.75	22.00
10,000	87.50	65.75	43.75	22.00
15,000	87.50	65.75	43.75	22.00
20,000	87.50	65.75	43.75	22.00
30,000	380.00	285.20	190.00	95.20
50,000	380.00	285.20	190.00	95.20
¹ Assumes the married man receives all the income and that he receives no other tax allowances and reliefs except for the personal allowance and the married couples allowance in 1990–91.