HC Deb 02 November 1993 vol 231 cc122-4W
Mr. Dewar

To ask the Chancellor of the Exchequer if he will update the information provided in the Treasury's "Tax Ready Reckoner and Tax Reliefs" on the basis of the September retail prices index.

Mr. Dorrell

[holding answer 27 October 1993]: Updated information for tables 2 to 6 is as follows.

Figures for tables 7 to 9 have not been revised as these are not dependent on the September retail prices index.

Table 2—Income Tax
1993–94 £ 1994–95 £
Personal allowance 3,445 3,515
Personal allowance aged (age 65–74) 4,200 4,280
Personal allowance (age 75 and over) 4,370 4,450
Married couple's allowance 1,720 1,760
Married couple's allowance (age 65–74) 2,465 12,715
Married couple's allowance (age 75 and over) 2,505 12,755
Additional personal2 and widow's bereavement allowance 1,720 1,760
Aged income limit3 14,200 14,500
Lower rate band 2,500 43,000
Basic rate limit5 23,700 24,200
1 Includes the extra £200 proposed in the March Budget to ensure that basic rate taxpayers aged 65 and over lose no more from the restriction of the married couple's allowance to 20 per cent. than basic rate taxpayers under 65.
2 Primarily for single parents.
3 If the total income, less allowable deductions, of a taxpayer aged 65 or over exceeds this limit, the age-related allowances are reduced by £1 for each £2 of income over the limit until the basic levels of the personal and married couple's allowances are reached.
4 This is the level proposed in the March Budget. If the band for 1993–94 were indexed, the 1994–95 band would be £2,600.
5 Higher rate income tax is payable on income—less those allowances and reliefs that are allowed at the higher rate—in excess of the-basic rate limit.

Table 3—Inheritance tax
1993–94 1994–95
Threshold 150 153

Table 4—Capital gains tax
1993–94 1994–95
Annual exempt amount:
Individuals 5,800 6,000
Trustees 2,900 3,000

Table 5—Costs of indexation for 1994–95
£ million
1994–95 1995–96
Indexation of income tax allowances and basic rate limit1 580 790
Of which:
Increases in allowances 450 600
Increase in the basic rate limit' 130 190
Indexation of inheritance tax threshold 10 20
Indexation of capital gains annual exempt amount 5
1 Cost includes the consequential effects on capital gains tax, but excludes the cost of the increase in the lower rate band from £2,500 to £3,000, and of the £200 increase in the married couple's allowance for taxpayers aged 65 or over, proposed in the March 1993 Budget.
2 Additional cost after previous change has been introduced.

Table 6—Direct effects of illustrative changes in direct taxes1
£ million cost/yield
1994–95 1995–96
Change lower rate by 1p3 390 220
Change basic rate by 1p 1,600 1,900
Change higher rate by 1p 270 440
Change personal allowance by £100 470 600
Change age-related personal allowances by £1004 45 60
Change married couple's allowance by £l005 140 190
Change age-related married couple's allowance by £1004 12 16
Change aged income limit by £500 5 9
Change all personal allowances by 1 per cent6 170 230
Change all personal allowances by 10 per cent6 1,700 2,250
Change married couple's and related allowances by 1 per cent.6 25 35
Change married couple's and related allowances by 10 per cent6 280 360
Lower rate band
Increase lower rate band by 10 per cent.6 240 310
Basic rate limit
Change basic rate limit by 1 per cent.6 55 80
Change basic rate limit by 10 per cent.6:
increase (cost) 500 720
decrease (yield) 630 890
Allowances, lower rate band and basic rate limit
Change all main allowances, lower rate band and basic rate limit by 1 per cent.6 290 380
Change all main allowances, lower rate band and basic rate limit by 10 per cent6:
increase (cost) 2,800 3,650
decrease (yield) 3,050 4,000
Change full rate by 1 percentage point 390 630
Change small companies' rate by 1 percentage point8 70 110
Change annual exempt amount by £500 for individuals and £250 for trustees 0 6
Change rate by 1 percentage point 14 31
Increase threshold by £5,000 14 29
1 The estimated revenue effects of the changes on receipts are rounded. The extent of rounding reflects the desire to avoid undue compounding of its effects when numbers are pro-rated, rather than the accuracy of the estimates.
2 The figures for income tax changes include consequential effects on the yield of capital gains tax. Changes are assumed to take effect from April 1994.
3 Including the effects of the change on receipts of advance corporation tax and on consequent liability to mainstream corporation tax.
4 Allowances for those aged 65–74 and aged 75 and over.
5 Figures include revenue effects of changing the additional personal allowance and the widow's bereavement allowances by £100.
6 Percentage changes are calculated with reference to 1993–94 levels
7 Assessment to corporation tax normally relates to the preceding year.

These estimates are the changes to revenue that would occur if the changed rates were applied to profits from 1 April 1993.

8 These figures ignore effects arising from the imputation system.

9 These changes are assumed to take effect from April 1994.

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