§ Mr. Tom Kingasked the Chancellor of the Exchequer what would be the approximate cost to the Revenue if there were a top level of 50 per cent. for tax on unearned income.
§ Mr. Robert Sheldon,pursuant to his reply [Official Report, 4th February 1976; Vol. 904, c. 666], gave the following information:
Income tax is charged on the total taxable income, and there are difficulties in distinguishing the tax on earned income from the tax on investment income. For 1975–76, if the maximum higher rate of income tax on all taxable income including both earned and investment income was 50 per cent. but the investment income surcharge was retained the cost would be about £380 million. On the arbitrary assumption that earned income formed the bottom slice of any mixed income, the cost of a top rate of tax of 50 per cent. on earned income only would be about £200 million. The difference of £180 million is, therefore, an estimate of the cost of a maximum higher rate on investment income of 50 per cent. apart from the investment income surcharge. The latest estimate of the yield of the investment income surcharge for 1975–76 is £205 million.