HL Deb 01 August 1978 vol 395 cc1273-5WA
Lord VAIZEY

asked Her Majesty's Government:

Whether they will estimate the number and percentage of taxpayers paying at the following marginal rates of tax on combined earned and unearned income.

  1. (1) Standard or basic rate.
  2. (2) 40 per cent.
  3. (3) 45 per cent.
  4. (4) 50 per cent.
  5. (5) 55 per cent.
  6. (6) 60 per cent.
  7. (7) 65 per cent.
  8. (8) 70 per cent.
  9. (9) 75 per cent.
  10. (10) 83 per cent.
  11. (11) 98 per cent.

Lord PEART

Counting married couples as one, the estimates at 1978–79 income levels are as follows:

Marginal rate (on earned or investment income, excluding investment income surcharge) Estimated No. of tax units ('000s) Percentage of all tax units
(1) (a) Lower rate 2,940 14.0
(b) Basic rate 17,440 82.9
(2) 40 per cent. 185 0.9
(3) 45 per cent. 125 0.6
(4) 50 per cent. 70 0.3
(5) 55 per cent. 70 0.3
(6) 60 per cent. 50 0.2
(7) 65 per cent. 40 0.2
(8) 70 per cent. 35 0.2
(9) 75 per cent. 40 0.2
(10) 83 per cent. 45 0.2
Total tax units 21,040 100.0

Some 30,000 of the 45,000 who pay income tax at a marginal rate of 83 per cent. are also liable to investment income surcharge at 15 per cent., making their total marginal rate on investment income 98 per cent. (including the surcharge). These represent 0.1 per cent. of tax units. The total marginal rates of a further 560,000 tax units also include liability to the investment income surcharge at 10 per cent. or 15 per cent. It has been assumed that married couples would make an election for separate taxation of the wife's earnings when to their advantage, and the marginal rate shown is the higher of that on the wife's earnings or that on the remaining income.

The numbers given as having the lower rate of income tax as their marginal rate are single persons liable at the lower rate only and married couples where the husband's income is liable at the lower rate only. The total of 25,600,000 taxpayers includes a further 4,500,000 earning wives, but there are difficulties in breaking these down by reference to their marginal rates since, except where there is an option for separate assessment or an election for separate taxation of wife's earnings, the wife's income is included with her husband's for the purpose of assessment to income tax.