Income Tax (Hansard, 17 May 1976)

§ Mr. Ralph Howell
asked the Chancellor of the Exchequer what was the income tax and national insurance liability, in money terms and as a percentage of gross earnings, in 1973–74 for a married couple with two children not over 11 years of age who earned £1,500, £2,000, £2,500, £3,000, £3,500, £4,000, £5,000 and £6,000; and what will be their tax liability in 1976–77, assuming in the first case that their gross earnings have kept up with inflation since April 1973 and in the second case that their gross earnings have kept in line with the DEP earnings index.

§ Mr. Robert Sheldon
Assuming the tax rates and allowances proposed for 1976–77, the figures are as follows:
335W

1976–77(†)

Earnings Tax NI Tax as percentage of earnings NI as percentage of earnings

£ £ £

2,539 … … … … 344.40 145.99 13.6 5.8

3,386 … … … … 640.85 194.70 18.9 5.8

4,232 … … … … 936.95 243.34 22.1 5.8

5,079 … … … … 1,233.40 284.44 24.3 5.6

5,925 … … … … 1,529.50 284.44 25.8 4.8

6,772 … … … … 1,836.80 284.44 27.1 4.2

8,464 … … … … 2,604.50 284.44 30.8 3.4

10,157 … … … … 3,511.20 284.44 34.6 2.8

Notes:

The earnings levels shown for 1976–77 correspond to those for 1973–74 with increases:

(^*) based on the increase in the General Index of Retail Prices-All Items, between April 1973 and March 1976.

(†) based on the increase in the Index of Average Earnings-All employees (Monthly Inquiry, between April 1973 and February 1976.

The tax figures includes the tax on family allowance and clawback.

§ Mr. Pardoe
asked the Chancellor of the Exchequer if he will estimate the revenue which would be gained in 1976–77 if the next £4,000 of taxable income in excess of the first £500 were charged at a tax rate of 40 per cent.

§ Mr. Robert Sheldon
The estimated additional yield for 1976–77 is about £1,700 million. It has been assumed that taxable income between £4,500 and £5,500 is also charged at 40 per cent. and that thereafter the rates proposed in the Budget apply.

Allowance Level of 1973–74 allowance 1973–74 allowance revalued at March 1976 prices Allowances proposed for 1976–77

£ £ £

Single person … … … 595 973 735^*

Married couple … … … 775 1,267 1,085^*

Child allowance:

not over 11 … … … 200 327 300

over 11, not over 16 … … … 235 384 335

over 16 … … … 265 433 365

Additional personal allowance … … … 130 213 350^*

^* Conditional.

The calculations take account of the increase in the general index of retail prices between April 1973 and March 1976, the latest available date.

1976–77(†)
Earnings	Tax	NI	Tax as percentage of earnings	NI as percentage of earnings
£	£	£
2,539	…	…	…	…	344.40	145.99	13.6	5.8
3,386	…	…	…	…	640.85	194.70	18.9	5.8
4,232	…	…	…	…	936.95	243.34	22.1	5.8
5,079	…	…	…	…	1,233.40	284.44	24.3	5.6
5,925	…	…	…	…	1,529.50	284.44	25.8	4.8
6,772	…	…	…	…	1,836.80	284.44	27.1	4.2
8,464	…	…	…	…	2,604.50	284.44	30.8	3.4
10,157	…	…	…	…	3,511.20	284.44	34.6	2.8
Notes:
The earnings levels shown for 1976–77 correspond to those for 1973–74 with increases:
(^*) based on the increase in the General Index of Retail Prices-All Items, between April 1973 and March 1976.
(†) based on the increase in the Index of Average Earnings-All employees (Monthly Inquiry, between April 1973 and February 1976.
The tax figures includes the tax on family allowance and clawback.

Allowance	Level of 1973–74 allowance	1973–74 allowance revalued at March 1976 prices	Allowances proposed for 1976–77
				£	£	£
Single person	…	…	…	595	973	735^*
Married couple	…	…	…	775	1,267	1,085^*
Child allowance:
not over 11	…	…	…	200	327	300
over 11, not over 16	…	…	…	235	384	335
over 16	…	…	…	265	433	365
Additional personal allowance	…	…	…	130	213	350^*
^* Conditional.