Income Tax (Hansard, 9 May 1977)

§ Mrs. Wise
asked the Chancellor of the Exchequer (1) what is the estimated cost of his proposal in the Budget to raise each of the thresholds at which income tax is payable at rates above the standard rates, giving separate costings for each band and stating how many taxpayers will benefit in each case;
(2) what is his estimate of the cost of the proposed reliefs of taxation relating to incomes at which rates above the standard rate become payable; and how much of this relates to investment income;
(3) how many taxpayers will gain from his proposed raising of the levels 403W of income over which tax is chargeable at more than the standard rate.

§ Mr. Robert Sheldon
I will let my hon. Friend have a reply as soon as possible.

§ Dr. McDonald
asked the Chancellor of the Exchequer if he will estimate in monetary and percentage terms the benefits obtained from the Budget by a married man with dependent wife, and two dependent children, earning £2,000 per annum, £3,000 per annum, £4,000 per annum,

INCREASE IN INCOME AFTER TAX^* AS COMPARED WITH 1976–77

Earnings (excluding family allowances or child benefit) A. After initial Budget changes only B. After all Budget changes†

£ £ Percentage £ Percentage

2,000 64.60 3.36 72.78 3.79

3,000 64.60 2.51 92.78 3.61

4,000 64.60 2.00 112.78 3.50

5,000 64.60 1.67 132.78 3.43

10,000 317.25 4.76 437.25 6.57

20,000 679.00 6.97 799.00 8.20

30,000 761.88 6.59 881.88 7.62

40,000 761.88 5.74 881.88 6.65

^* Income including child benefit/family allowance less income tax. Increase in national insurance contributions affecting those earning £5,000 and above have not been included. It has been assumed for 1976–77 that family allowances are claimed throughout, although in certain cases it would be to the taxpayer's advantage if the entitlement were renounced.

† Including the proposed reduction in the basic rate of income tax to 33 per cent. It has been assumed that neither child is over 11 years of age.

A breakdown of the cost of the income tax proposals in the Budget by reference to ranges of earning income is not available, but the following gives the estimates available by ranges of total net income(¹)

Range of Total Net Income Cost £m.

£

20,000+ … … 70

2,000–4,000 … … 645

4,000–6,000 … … 690

6,000–8,000 … … 310

8,000–10,000 … … 170

10,000–20,000 … … 215

20,000+ … … 70

2,250²

(¹) As defined on page 35 of Inland Revenue Statistics 1976.

(²) It is not possible to give a breakdown by range of income for the £43 million tax relief relating to the treatment of foreign earnings, retirement annuities and savings bank interest.

404W
£5,000 per annum, £10,000 per annum, £20,000 per annum, £30,000 per annum and £40,000 per annum, and the costs in terms of loss of revenue to the Exchequer of providing these benefits for each of the above earned income groups.

§ Mr. Robert Sheldon
, pursuant to his reply [Official Report, 3rd May 1977; Vol. 931, c. 137], gave the following information:
The figures for the income tax changes are as follows:

INCREASE IN INCOME AFTER TAX^* AS COMPARED WITH 1976–77
Earnings (excluding family allowances or child benefit)	A. After initial Budget changes only	B. After all Budget changes†
£	£	Percentage	£	Percentage
2,000	64.60	3.36	72.78	3.79
3,000	64.60	2.51	92.78	3.61
4,000	64.60	2.00	112.78	3.50
5,000	64.60	1.67	132.78	3.43
10,000	317.25	4.76	437.25	6.57
20,000	679.00	6.97	799.00	8.20
30,000	761.88	6.59	881.88	7.62
40,000	761.88	5.74	881.88	6.65
^* Income including child benefit/family allowance less income tax. Increase in national insurance contributions affecting those earning £5,000 and above have not been included. It has been assumed for 1976–77 that family allowances are claimed throughout, although in certain cases it would be to the taxpayer's advantage if the entitlement were renounced.
† Including the proposed reduction in the basic rate of income tax to 33 per cent. It has been assumed that neither child is over 11 years of age.

Range of Total Net Income			Cost £m.
£
20,000+	…	…	70
2,000–4,000	…	…	645
4,000–6,000	…	…	690
6,000–8,000	…	…	310
8,000–10,000	…	…	170
10,000–20,000	…	…	215
20,000+	…	…	70
			2,250²
(¹) As defined on page 35 of Inland Revenue Statistics 1976.
(²) It is not possible to give a breakdown by range of income for the £43 million tax relief relating to the treatment of foreign earnings, retirement annuities and savings bank interest.