§ Mr. LoughtonTo ask the Chancellor of the Exchequer what assessment he has made of the total amount of tax relief forgone through the operation of ISAs in each of the 10 years of their intended lifespan, in terms of(a) Capital Gains Tax relieved, (b) dividend income tax relieved and (c) income tax on deposit interest relieved. [36325]
§ Mr. Geoffrey Robinson[holding answer 27 March 1998]: The total Exchequer cost of tax relief for the new savings accounts, including PEPs held at 5 April 1999 and remaining TESSAs, is estimated at around £1.6 billion for 1999–2000, which includes a cost of £425 million for capital gains tax, and £1,150 million for income tax, of which £225 million relates to the payment of tax credits on dividends on shares in UK companies and £250 million is higher rate relief. The total cost 2000–01 is estimated at some £1.8 billion, which includes a cost of £475 million for capital gains tax, and £1,325 million for income tax, of which £225 million relates to the payment of tax credits on dividends and £275 million is higher rate relief.
In future years the Government intend to continue spending broadly as much on the new savings accounts as would have been spent on PEPs and TESSAs. Estimates are subject to considerable uncertainty, since they are dependent on a range of assumptions including the level of take up, stock market performance and interest rates.
§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer what is the additional cost to the Exchequer of introducing the individual savings account in(a) 1999–2000, (b) 2000–01, (c) 2001–02, (d) 2002–03 and (e) 2003–04. [36397]
§ Mr. Geoffrey Robinson[holding answer 30 March 1998]: The Red Book shows an estimated yield of £30 million in 1999–2000, and an estimated cost of £30 million in 2000–01, compared with the cost of PEPs and TESSAs continuing with their current tax reliefs. The Government intend to continue to spend broadly as much on the new savings accounts in later years as would have been spent on PEPs and TESSAs.