§ Mr. Fieldasked the Chancellor of the Exchequer (1) if he will update the, answer given to the Member for Norfolk, North (Mr. Howell) Official Report, 27 July 536W 1979, columns 557–8, on tax thresholds;
(2) if he will update for the year 1980–81 the answer given to the hon. Member for Birkenhead, Official Report, 21 December 1979, column 451, on tax thresholds.
§ Mr. Peter Rees[pursuant to his reply, 10 July 1980, c. 243]: Although the previous answers refer to "tax thresholds", the figures related to what is now described as "tax free income". "Tax free income" is the amount of income that can be received before liability to tax arises. For years up to 1976–77 it is the single or married tax allowance plusߞwhere appropriateߞchild tax allowances less family allowance deduction (clawback). For years from 1977–78 it is the amount of the tax allowances, plus child benefit for families with children. The "tax threshold" is now defined as the amount that can be earned before liability to tax arises, and is currently equal to the amount of the tax allowances.
The figures in the two previous answers to which the hon. Member refers related in the case of families with two and four children, to children of different ages.
Figures for tax free income as a proportion of average manual earnings are as table A below.
The revised figures for 1978–79 are based on the average of the new earnings survey estimates of the earnings of full time adult male manual workers for April at the start and finish of the tax year. To give an estimate for 1979–80 the figure from the April 1979 new earnings survey has been updated to October 1979 by the monthly index of average earnings. No comparable figures for 1980–81 are available at present.
Figures for tax free income as on index in money terms and at 1974–75 prices are as table B below.
The figures for 1979–80 have been recalculated now that the average general index of retail prices (all items) for that financial year is available. For 1980–81 an increase of 16½per cent. over 1979–80 in the retail prices index has been assumed—this is the increase between the fourth quarter of 1979 and the fourth quarter 1980 as forecast in the Financial Statement and Budget Report.
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TABLE A TAX FREE INCOME AS A PERCENTAGE OF AVERAGE MANUAL EARNINGS Single person per cent. Married couple per cent. Two wage married couple per cent. Married couple with 1 child under 11 per cent. Married couple with 2 children aged 12 and 8 per cent. Married couple with 3 children aged 14, 12 and 8 per cent. Married couple with 4 children aged 16, 14, 12 and 8 per cent. 1978–79 … … … … … 21.8 34.0 55.8 38.0 42.6 46.9 51.6 1979–80 … … … … … 22.1 34.5 56.6 36.9 39.3 41.4 43.4
TABLE B TAX FREE INCOME 1974–75 — 100 Single Married Married 1 child aged under 11 Married 2 children aged under 11 Married 4 children 2 aged under 11, 2 11–16 Money terms At 1974–75 prices Money terms At 1974–75 prices Money terms At 1974–75 prices Money terms At 1974–75 prices Money terms At 1974–75 prices 1974–75 … … … 100 100 100 100 100 100 100 100 100 100 1979–80 … … … 186 91 210 102 183 89 173 84 152 74 1980–81 … … … 220 92 248 104 214 89 200 84 174 73