Income Tax (Hansard, 5 March 1993)

§ Ms Harman
To ask the Chancellor of the Exchequer if he will update his answer of 21 January 1992, to the hon. Member for Leeds, West (Mr. Battle),Official Report, column 128, on the introduction of an upper limit for income tax allowances and reliefs for the years 1992–93 and 1993–94.

§ Mr. Dorrell
[holding answer 25 February 1993]Estimates of the direct revenue yield in a full year at 1992–93 levels of income from imposition of the specified limits for allowances and reliefs within the current income tax system are given below. These are based on information compiled from a number of statistical surveys and are subject to more than the usual margin of uncertainty.

Limit £ Yield £ million

10,000 690

15,000 380

20,000 280

After restriction of the relevant allowances and reliefs to the basic rate the estimated further yield from imposing the specified limits would be as follows:

Full year yield at 1992–93 income levels, £ million Limit for total allowances and reliefs

After restriction to the basic rate of

£10,000 £15,000 £20,000

(a) all personal allowances except the basic personal allowances 610 360 270

(b) relief for personal pension contributions 560 310 230

(c) relief for employees' contributions to occupational pension schemes 630 370 270

(d) allowances and reliefs in (a) and (b) 510 300 230

(e) allowances and reliefs in (a) and (c) 580 350 270

(f) reliefs in (b) and (c) 500 300 230

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After restriction to the basic rate of

£10,000 £15,000 £20,000

(g) allowances and reliefs in (a), (b) and (c) 480 290 220

The number of people with total allowances and reliefs in excess of £10,000 is just under 600,000. The corresponding figures for £15,000 and £20,000 are about 85,000 and 45,000 respectively. The estimates of revenue yield do not take account of any behavioural effects which might result from the introduction of the changes. It is not possible to provide detailed information for 1993–94.

§ Ms Harman
To ask the Chancellor of the Exchequer what is the average individual cumulative gain(a) in cash prices and (b) in 1991–92 prices to those earning (i) £5,000, (ii) £10,000, (iii) £15,000, (iv) £20,000, (v) £25,000, (vi) £30,000, (vii) £40,000, (viii) £50,000, (ix) £60,000, (x) £70,000 and (xi) £100,000 as a result of changes in (1) income tax and (2) income tax and national insurance since 1979 and 1987.

§ Mr. Dorrell
[holding answer 25 February 1993]: Latest estimates of the reduction in liability resulting from changes in national insurance and income tax rates, allowances and thresholds are in the table. The 1978–79 and 1987–88 income tax regimes have been indexed to 1992–93 levels by reference to the statutory formula and allowing for independent taxation.

Quantile group of taxpayers Total income (£ billion) Average income (£) Total earned income¹ (£ billion) Average earned income £

1990–91

Top 1 per cent. 28 107,800 21 81,400

Top 5 per cent. 69 52,200 54 41,700

Top 10 per cent. 103 39,100 84 32,100

Bottom 70 per cent. 161 8,800 148 8,100

Bottom 50 per cent 95 7,300 87 6,700

Bottom 10 per cent. 12 4,600 11 4,200

All taxpayers 358 13,600 316 12,100

1991–92

Top 1 per cent. 29 114,700 23 89,600

Top 5 per cent. 71 56,000 59 46,300

Top 10 per cent. 106 41,900 90 35,600

Bottom 70 per cent. 165 9,300 154 8,700

Bottom 50 per cent. 97 7,600 90 7,100

Bottom 10 per cent. 12 4,800 11 4,500

All taxpayers 370 14,500 334 13,200

1992–93

Top 1 per cent. 29 115,400 22 91,400

Top 5 per cent. 70 56,500 59 47,900

Top 10 per cent. 105 42,400 91 37,000

Bottom 70 per cent. 164 9,500 154 8,900

Bottom 50 per cent. 96 7,800 90 7,300

Bottom 10 per cent. 12 5,000 11 4,600

All taxpayers 367 14,800 338 13,700

¹ Income from employment, self-employment and pensions.

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Average change in 1992–93 (£)

Compared with 1978–79 indexed regime Compared with 1987–88 indexed regime

Range of individuals income in 1992–93£ Income tax Income tax and National Insurance Income tax Income tax and National Insurance

Under 5,000 150 180 80 90

5,000–10,000 390 360 190 250

10,000–15,000 730 610 260 400

15,000–20,000 1,080 830 340 490

20,000–25,000 1,490 1,040 430 570

25,000–30,000 2,030 1,550 510 630

30,000–40,000 2,870 2,380 370 480

40,000–50,000 4,750 4,260 730 840

50,000–60,000 7,340 6,850 1,660 1,760

60,000–70,000 11,000 10,500 3,060 3,150

70,000–80,000 14,800 14,300 4,840 4,920

Over 80,000 48,200 47,500 18,900 18,900

Average 1,200 1,000 400 480

I regret that a reliable analysis of taxpayers with incomes over £100,000 is not available.
For the purposes of the calculations in the first two columns of the table the indexed regime of 1978–79 has been applied directly to the income base of 1992–93. In practice retention of the 1978–79 regime, indexed as appropriate, for the intervening years would have led to changes in the income base.

§ Ms Harman
To ask the Chancellor of the Exchequer what was the total and average income and earned income in 1990–91, 1991–92 and 1992–93 of(a) the top 1 per cent., (b) the top 5 per cent., (c) the top 10 per cent., (d) the bottom 70 per cent., (e) the bottom 10 per cent. of taxpayers and (g) all taxpayers.

§ Mr. Dorrell
[holding answer 25 February 1993]: Estimates are given in the table.
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§ Ms Harman
To ask the Chancellor of the Exchequer if he will estimate the effect on the Treasury revenues in 1993–94, and in a full year, of introducing a child care tax allowance of £50 a week for(a) working mothers and (b) either partner in a two-earner couple, assuming that relief is available at the basic rate only, giving figures separately for (i) all families with dependent children and (ii) families with at least one child under five years.

§ Mr. Dorrell
[holding answer 25 February 1993]: Estimates of the full year cost of introducing such an allowance in 1993–94 are set out in the table. The first year cost would depend on how the measure was implemented.
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Cost (£ billion)

Allowance of £50 per week restricted to basic or lower rate relief and given to

(a) working mothers and lone parents (b) the higher mothers and earner in a two-earner couple

All families with dependent children¹ 1.4 2.2

Family with at least one child under the age of five 0.5 0.9

¹ Includes dependent children aged 16 to 18

Full year yield at 1992–93 income levels, £ million Limit for total allowances and reliefs
	After restriction to the basic rate of
	£10,000	£15,000	£20,000
(a) all personal allowances except the basic personal allowances	610	360	270
(b) relief for personal pension contributions	560	310	230
(c) relief for employees' contributions to occupational pension schemes	630	370	270
(d) allowances and reliefs in (a) and (b)	510	300	230
(e) allowances and reliefs in (a) and (c)	580	350	270
(f) reliefs in (b) and (c)	500	300	230

Quantile group of taxpayers	Total income (£ billion)	Average income (£)	Total earned income¹ (£ billion)	Average earned income £
1990–91
Top 1 per cent.	28	107,800	21	81,400
Top 5 per cent.	69	52,200	54	41,700
Top 10 per cent.	103	39,100	84	32,100
Bottom 70 per cent.	161	8,800	148	8,100
Bottom 50 per cent	95	7,300	87	6,700
Bottom 10 per cent.	12	4,600	11	4,200
All taxpayers	358	13,600	316	12,100
1991–92
Top 1 per cent.	29	114,700	23	89,600
Top 5 per cent.	71	56,000	59	46,300
Top 10 per cent.	106	41,900	90	35,600
Bottom 70 per cent.	165	9,300	154	8,700
Bottom 50 per cent.	97	7,600	90	7,100
Bottom 10 per cent.	12	4,800	11	4,500
All taxpayers	370	14,500	334	13,200
1992–93
Top 1 per cent.	29	115,400	22	91,400
Top 5 per cent.	70	56,500	59	47,900
Top 10 per cent.	105	42,400	91	37,000
Bottom 70 per cent.	164	9,500	154	8,900
Bottom 50 per cent.	96	7,800	90	7,300
Bottom 10 per cent.	12	5,000	11	4,600
All taxpayers	367	14,800	338	13,700
¹ Income from employment, self-employment and pensions.

Average change in 1992–93 (£)
	Compared with 1978–79 indexed regime	Compared with 1987–88 indexed regime
Range of individuals income in 1992–93£	Income tax	Income tax and National Insurance	Income tax	Income tax and National Insurance
Under 5,000	150	180	80	90
5,000–10,000	390	360	190	250
10,000–15,000	730	610	260	400
15,000–20,000	1,080	830	340	490
20,000–25,000	1,490	1,040	430	570
25,000–30,000	2,030	1,550	510	630
30,000–40,000	2,870	2,380	370	480
40,000–50,000	4,750	4,260	730	840
50,000–60,000	7,340	6,850	1,660	1,760
60,000–70,000	11,000	10,500	3,060	3,150
70,000–80,000	14,800	14,300	4,840	4,920
Over 80,000	48,200	47,500	18,900	18,900
Average	1,200	1,000	400	480

Cost (£ billion)
	Allowance of £50 per week restricted to basic or lower rate relief and given to
	(a) working mothers and lone parents	(b) the higher mothers and earner in a two-earner couple
All families with dependent children¹	1.4	2.2
Family with at least one child under the age of five	0.5	0.9
¹ Includes dependent children aged 16 to 18