§ Mr. BettsTo ask the Chancellor of the Exchequer if he will update his answer to the hon. Member for Glasgow, Garscadden (Mr. Dewar) of 25 February 1993,Official Report, columns 682-84, on the tax liabilities of taxpayers in different income bands, giving figures for 1994–95 and estimates for 1995–96 based on the assumption of statutory indexation and including measures already announced in the 1993 budgets.
§ Sir George Young[holding answer 2 November 1994]: Latest estimates of the average reductions in income tax and national insurance liabilities in 1994–95 and 1995–96 assuming statutory indexation and inclusion of measures already announced, compared with liabilities under an indexed 1987–88 regime are in the table. An equivalent assumption has been made about indexation of the national insurance regime for 1995–96. The 1987–88 income tax regime has been indexed to 1994–95 and 1995–96 levels by reference to the statutory formula and allowing for the effect of the independent taxation of husbands and wives. 1286W
Average reduction or increase (-) in 1994–95 compared with 1987–88 indexed regime (£) Range of individuals Income in 1994–95(£) Income tax Income tax and National Insurance Under 5,000 40 60 5,000-10,000 150 200 10,000-15,000 200 270 15,000-20,000 250 280 20,000-25,000 330 290 25,000-30,000 370 290 30,000-40,000 -70 -160 40,000-50,000 140 50 50,000-70,000 1,460 1,360 70,000-80,000 4,040 3,930 Over 80,000 17,800 17,700 Average 330 350
Average reduction or increase (-) in 1995–96 compared with 1987–88 indexed regime (£) Range of individuals income in 1995–96 (£) Income tax Income tax and National Insurance Under 5,000 30 50 5,000-10,000 70 110 10,000-15,000 10 80 15,000-20,000 -60 -40 20,000-25,000 -90 -120 25,000-30,000 -120 -180 30,000-40,000 -640 -710 40,000-50,000 -620 -700 50,000-70,000 620 530 70,000-80,000 3,120 3,020 Over 80,000 16,900 16,800 Average 110 130 For the purpose of the calculations the indexed regime of 1987–88 has been applied directly to the income bases of 1994–95 and 1995–96. In practice, retention of the 1987–88 regime, indexed as appropriate, for the intervening years would have led to changes in the income base.
§ Mr. BettsTo ask the Chancellor of the Exchequer if he will add to the table in his answer to the hon. Member for Glasgow, Garscadden (Mr. Dewar) of 3 November 1993,Official Report, columns 245–56, estimating the tax liabilities in 1995–96 for the given income ranges showing the effects of all tax changes including those announced in 1993 budgets and including both indirect taxation and intermediate taxation.
§ Sir George Young[holding answer October 1994]: The impact of indirect and intermediate taxation depends on individual spending patterns and the effect of indirect and intermediate taxes on prices.
§ Mr. BettsTo 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.
§ Sir George Young[holding answer 2 November 1994]: Updated information for tables 2 to 6, and part of table 7, is as follows. Figures for the rest of table 7, as well as tables 8 to 10, have not been revised as these are not dependent on the September retail prices index. 1287W
Table 2 Income tax £ 1994–95 1995–96 Personal allowance 3,445 3,525 Personal allowance (age 65-74) 4,200 4,300 Personal allowance (age 75 and over) 4,370 4,470 Married couple's allowance 1,720 11,720 Married couple's allowance (age 65-74) 2,665 12,995 Married couple's allowance (age 75 and over) 2,705 13,035 Additional personal2 and widow's bereavement allowance 1,720 11,720 Aged income limit3 14,200 14,600 Lower rate band 3,000 3,100 Basic rate limit4 23,700 24,300 Notes:
1 The values of these allowances were announced in the November 1993 Budget. The additional £330 for taxpayers aged 65 or over ensures that they lose no more from the restriction of the married couple's allowance to 15 per cent. than taxpayers aged 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 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 £'000 1994–95 1995–96 Threshold 150 154
Table 4 Capital gains tax £ 1994–95 1995–96 Annual exempt amount: individuals 5,800 6,000 trustees 2,900 3,000 1288W
Table 5 Cost of indexation for 1995–96 £ million 1995–96 1996–97 Indexation of income tax allowances, lower rate band and basic rate limit1of which: 700 920 increases in allowances 450 560 increase in the lower rate band2 80 100 increase in the basic rate limit2 170 260 Indexation of inheritance tax threshold 15 25 Indexation of capital gains tax annual exempt amount — 2 1Cost includes the consequential effects of capital gains tax, but excludes the cost of changes in the married couple's allowance and related allowances as these allowances were announced In the November 1993 Budget. 2 Additional cost after previous change has been introduced. 1289W
Table 6 Direct effects of illustrative changes in income tax1 £ million cost/yield 1995–96 1996–97 Rates Change lower rate by 1p2 3770 3650 Change basic rate by 1p 1,700 2,100 Change higher rate by 1p 310 520 Allowances Change personal allowance £100 490 63 Change age-related personal allowance by £1004 45 60 Change married couple's allowance by £ 1005 120 150 Change age-related married couple's allowances by £1004 11 14 Change aged income limit by £500 6 11 Change all personal allowances by 1 per cent.6 190 240 Change all personal allowances by 10 per cent.6 1,850 2,400 Change married couple's and related allowances by 1 per cent.6 25 30 Change married couple's and related allowances by 10 per cent.6 240 310 Lower rate band Increase lower rate band by 10 per cent.6 250 320 Basic rate limit Change basic rate limit by 1 per cent.6 65 95 Change basic rate limit by 10 per cent.6 increase (cost) 590 870 decrease (yield) 740 1,050 Allowances, lower rate band and basic rate limit Change all main allowances, lower rate band and basic rate limit by 1 per cent.6 300 400 Change all main allowances, lower rate band and basic rate limit by 10 per cent.6: increase (cost) 2,900 3,900 decrease (yield) 3,200 4,250 1The estimates 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. The figures include consequential effects on the yield of capital gains tax. Changes are assumed to take effect from April 1995. 2Including the effects of the changes on receipts of ACT and on consequential liability to mainstream corporation tax. 3In last year's Ready Reckoner it was assumed that a change in the lower rate would affect the married couple's allowance and related allowances and mortgage interest relief. These allowances and mortgage interest relief have since been restricted to 15 per cent. with effect from April 1995 and will not consequentially reduce the effects of a change in the lower rate. 4Allowances for those aged 65–74 and aged 75 and over. 5Figures include revenue effects of changing the additional personal allowance and widow's bereavement allowance by £100. 6Percentage changes are calculated with reference to 1994–95 levels, except for the married couple's allowance and related allowances, where they are calculated with reference to the 1995–96 levels announced in the November 1993 Budget.
Table 7 Direct effects of illustrative changes in other direct taxes1 £ million cost/yield 1995–96 1996–97 Capital gains tax Increase annual exempt amount by £500 for individuals and £250 for trustees — 6 Inheritance tax Change rate by 1 percentage point 16 33 Increase threshold by £5,000 17 33 1The 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. The figures include consequential effects on the yield of capital gains tax. Changes are assumed to take effect from April 1995.
§ Mr. BettsTo ask the Chancellor of the Exchequer if he will update his answer to the hon. Member for Glasgow, Garscadden (Mr. Dewar) of 1 November 1993,Official Report, column 20, to provide similar estimates of the burden of direct and indirect taxes for 1995–96 based on the assumption of statutory indexation and including measures already announced in the 1993 budgets.
§ Sir George Young[holding answer 2 November 1994]: The burden of direct and indirect taxes for 1995–96 will depend on the levels of earnings in that year. The impact of pre-announced Budget measures averaged over all households will be about £3 a week in 1995–96.
§ Mr. BettsTo ask the Chancellor of the Exchequer if he will update the answer to the hon. Member for Glasgow, Garscadden (Mr. Dewar) of 3 November 1993,Official Report, column 254, to include estimates for taxing child benefit for 1995–96 based on the assumption of statutory indexation and measures already announced in the 1993 budgets; and if he will include estimates for the effect on revenues if child benefits was taxed at the higher rate only.
§ Sir George Young[holding answer 2 November 1994]: Were child benefit to be taxed on the assumption given the yield would be:
Yield in a full year (£ million) 1994–95 1995–96 Child benefit taxed as: Father's or —All taxpayers 1,200 1,300 lone mothers –40 per cent income taxpayers only 300 300 Mother's or —All taxpayers 650 700 lone father's –40 per cent. income taxpayers only 40 40 The estimates for 1995–96 are based on the assumption that child benefit will be increased in line with the September retail prices index.