§ 35. Mr. Higginsasked the Chancellor of the Exchequer why the tax reckoner for prefix F codes for personal income tax, issued by the Inland Revenue, starts at a rate of 30.5 per cent.; what is the definition of a prefix F code; what categories of person will be charged tax on such a basis; why those with different codes, will, contrary to existing practices, be charged different rates of tax; and if he will make a statement.
§ Mr. Denzil DaviesF codes are a new type of PAYE code designed to help the540W taxpayer. In many cases they enable State pensioners, who so desire and who would otherwise have to pay some of their tax in lump sums direct to the Revenue to pay it all through PAYE deductions. Their actual tax liability is not affected. The code can be given to most taxpayers who have income to which PAYE is applied, and whose State pension or benefit exceeds their tax allowances. The new tables issued to employers for use with F codes start at a tax rate of 30.5 per cent. because these tables are designed for indefinite use and, therefore, allow for the possibility that the basic rate of tax might be lower than at present. A full description of the F code system was given in an Inland Revenue Press release last November, and I have placed a copy in the Library.