HC Deb 08 April 1998 vol 310 cc243-4W
Mr. Loughton

To ask the Chancellor of the Exchequer what assessment he has made of the total amount of tax relief lost from(a) general PEPs and (b) single PEPs as of 5 April 1999 under the Budget decision to allow them continue in terms of (i) Capital Gains Tax relieved and (ii) dividend income tax relieved based on (A) the current rate of 20 per cent. and (B) the proposed new rate of 10 per cent. [36329]

Mr. Geoffrey Robinson

[holding answer 27 March 1998]: All PEPs held at 5 April 1999 can continue to be held as PEPs, outside the new savings account, but with the same tax advantages as the new account. The Exchequer cost of tax relief for these PEPs is estimated at around £900 million for 1999–2000, which includes a cost of £425 million for capital gains tax, and £475 million for income tax, of which some £200 million relates to the payment of tax credits at 10 per cent. on dividends on shares in UK companies, and £175 million is higher rate relief. Payment of tax credits at 20 per cent. would raise the cost by around £200 million. 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.