Taxation Statistics (Hansard, 15 February 1984)

§ Mr. Ralph Howell
asked the Chancellor of the Exchequer if he will compare the gross income in pound sterling equivalent at which income tax on earned income becomes payable at 30 per cent. and 50 per cent. in the

TABLE 1

Gross income in pound sterling at which income tax on employment income becomes payable at 30 per cent.

Single person Married couple Married couple with two dependent children

United Kingdom 1,785 2,785 2,785

United States of America 13,710 (28 per cent.) 22,785 24,215

17,500 (32 per cent.)

France see note 6 15,420 (31.2) 21,740 (28.2)

Germany 7,600 14,710 15,175

Japan 29,940 (30.6) 30,900 (30.6) 32,760 (30.6)

TABLE 2

Gross income in pound sterling at which income tax on employment income becomes payable at 50 per cent.

Single person Married couple Married couple with two dependent children

United Kingdom 23,585 24,595 24,595

United States of America 40,210 79,570 81,000

200W
United Kingdom with the levels in the United States of America, France Germany and Japan, for (a) a single person, (b) a single-wage married couple and (c) a single-wage couple with two children.

§ Mr. Moore
The information requested is given in the tables:
201W

Single person Married couple Married couple with two dependent children

France 26,680 (51.5) 45,430 (48.5) 45,595 (49.6)

Germany 15,835 31,260 31,800

Japan 71,670 (52.25) 72,605 (52.25) 74,480 (52.25)

Notes:

1. The figures relate to income of the year 1983 (1983–84 in the case of the United Kingdom).

2. Conversions to sterling were made at the exchange rates prevailing in London on 31 January 1984. They may not fully reflect differences in purchasing power between sterling and the other currencies.

3. It is assumed that the income of the married couples is wholly employment income of the husband.

4. Personal reliefs (including child tax allowances, where given, but not child benefits) employment income reliefs and other standard reliefs have been taken into account, as well as income tax relief for social security contributions in certain countries.

5.

(i) The rates of 30 per cent. and 50 per cent. in the tables are actual tax rates, that is, nominal rates adjusted where appropriate for the reliefs mentioned above.

(ii) Where the actual tax rate is never precisely 30 per cent. or 50 per cent. the rate applicable to the income level in the table is given in brackets.

6. In France, a single person's income is effectively exempt where it is less than £3,650. Where the income is between £3,650 and £4,700 the special reliefs for low incomes are gradually withdrawn, effectively doubling the tax rates which would normally have applied to give actual tax rates of 28.8 per cent. and 36 per cent. Above £4,700 the lower, ordinary rates apply, and a rate close to 30 per cent., viz 29.8 per cent., is not reached again until an income of £12,920.

7.

(i) The figures in the tables reflect national (federal) income taxes only.

(ii) Local income taxes are levied in Japan and the United States of America. The figures for combined national (federal) and local income taxes at typical rates are as follows:

30 per cent. 50 per cent.

Single person
£
Married couple
£
Married couple with two dependent children
£
Single person
£
Married couple
£
Married couple with two dependent children
£

United States of America 11,430 19,000 (31) 20,430 (32) 25,080 (51) 34,140 35,215

Japan 18,190 (30.6) 18,190 (29.7) 19,330 (29.7) 39,590 (50.4) 40,530 (50.4) 42,405 (50.4)

§ Mr. Hordern
asked the Chancellor of the Exchequer if he will show the proportion of earnings taken by income tax and national insurance contributions, shown separately, for a married man on average earnings with two children aged under 11 years, at the latest convenient date and at 1 January 1980, 1 January 1970 and 1 January 1960, respectively.

§ Mr. Moore
[pursuant to his reply, 9 February 1984, c. 740]: Estimates for financial years are as follows:

Percentage of average manual earnings

Married men with two children under 11

Income tax less child benefit National insurance contributions

1959–60 -0.6 3.7

1969–70 9.4 5.6

1979–80 11.0 6.5

1983–84 10.8 9.0

Calculations assume that no income tax allowances or reliefs other than the married man's allowance and, where appropriate, child tax allowances are available. National insurance contributions are at the not contracted-out rate.

§ Mr. Rooker
asked the Chancellor of the Exchequer if he will estimate the costs in 1983–84 of (a) mortgage interest relief, (b) capital gains tax relief on only or main residence, (c) special rate of corporation tax for building societies, (d) exemptions applicable to capital transfer tax and (e) total exemptions applicable to capital gains tax.

§ Mr. Moore
[pursuant to his reply, 8 February 1984, c. 603.]: Estimates for 1983–84 are as follows. Each relief has been costed separately. The combined costs of more than one relief cannot therefore be calculated by 202W summarising the figures. These represent the reduction in tax liabilities resulting from the existence of the relief and cannot in general be interpreted as the tax yield from withdrawing it. They are on the basis of accruals rather than receipts except where otherwise stated.

£ million

(a) mortgage interest relief 2,750

(b) capital gains tax relief on only or main residence† 2,500

(c) special rate of corporation tax for building societies‡ 35

(d) exemptions and reliefs applicable to capital transfer tax:║

Transfers on death to surviving spouses¶ 300^*

Transfers to charities on death 45^*

Double taxation relief 2

Agricultural relief 30

Business relief 20

Relief for heritage property and maintenance funds● 50^*

Killed in war relief under 1

Quick succession relief 3

There are other reliefs and exemptions applicable to capital transfer tax but no reliable estimates of their costs are available.

(e) capital gains tax exemptions║■

It is not possible to estimate the total costs of exemptions applicable to capital gains tax owing to the interaction of the various reliefs and the extensive amount of information about capital gains that would be required. The separate costs for those exemptions for which estimates can be given are as follows:

203W

£ million

Annual exemption 200

£5,300—individuals; £2,650—trusts

Gains accrued but unrealised at death 60^*

Gains accruing to authorised investment and unit trusts 60^*

Gains accruing to life assurance policies^⋆ 100^*

Residential letting 1

Traded Options: not treated as wasting assets 5^*

Relief for loans to traders 5^*

General roll-over relief for gifts (including transfers out of trusts) 50

Reliefs on compulsory purchase 3

^* These figures are particularly tentative and subject to a wide margin of error.

† On the assumption that there would be no relief for gains when disposal proceeds are applied to the purchase of another house and that there would be no consequential effects on length of ownership and on the housing market. Indexation of the acquisition costs will substantially reduce the cost in future years.

‡ Effect on receipts in 1982–83.

║ For capital transfer tax and capital gains tax most of the costs are on a receipts basis, that is, the revenue which would be lost assuming the exemptions and reliefs applied to the transactions on which the 1983–84 receipts were based. The exceptions are the capital gains tax exemption of life assurance policies and the exemption of the only or main residence, which are both on an accruals basis.

¶ This cost is in respect only of transfers for which an account is submitted to the capital taxes offices.

● Effect on receipts in 1983–84.

■ Including corporation tax on company gains.

⋆ It should be noted that in the absence of a capital gains charge on most life assurance disposals, certain gains from surrenders and maturities of life assurance policies are treated as income to be assessed for higher rate income tax.

TABLE 1
Gross income in pound sterling at which income tax on employment income becomes payable at 30 per cent.
	Single person	Married couple	Married couple with two dependent children
United Kingdom	1,785	2,785	2,785
United States of America	13,710 (28 per cent.)	22,785	24,215
	17,500 (32 per cent.)
France	see note 6	15,420 (31.2)	21,740 (28.2)
Germany	7,600	14,710	15,175
Japan	29,940 (30.6)	30,900 (30.6)	32,760 (30.6)

TABLE 2
Gross income in pound sterling at which income tax on employment income becomes payable at 50 per cent.
	Single person	Married couple	Married couple with two dependent children
United Kingdom	23,585	24,595	24,595
United States of America	40,210	79,570	81,000

	30 per cent.	50 per cent.
	Single person £	Married couple £	Married couple with two dependent children £	Single person £	Married couple £	Married couple with two dependent children £
United States of America	11,430	19,000 (31)	20,430 (32)	25,080 (51)	34,140	35,215
Japan	18,190 (30.6)	18,190 (29.7)	19,330 (29.7)	39,590 (50.4)	40,530 (50.4)	42,405 (50.4)

Percentage of average manual earnings
	Married men with two children under 11
	Income tax less child benefit	National insurance contributions
1959–60	-0.6	3.7
1969–70	9.4	5.6
1979–80	11.0	6.5
1983–84	10.8	9.0

	£ million
(a) mortgage interest relief	2,750
(b) capital gains tax relief on only or main residence†	2,500
(c) special rate of corporation tax for building societies‡	35
(d) exemptions and reliefs applicable to capital transfer tax:║
Transfers on death to surviving spouses¶	300^*
Transfers to charities on death	45^*
Double taxation relief	2
Agricultural relief	30
Business relief	20
Relief for heritage property and maintenance funds●	50^*
Killed in war relief	under 1
Quick succession relief	3
There are other reliefs and exemptions applicable to capital transfer tax but no reliable estimates of their costs are available.
(e) capital gains tax exemptions║■
It is not possible to estimate the total costs of exemptions applicable to capital gains tax owing to the interaction of the various reliefs and the extensive amount of information about capital gains that would be required. The separate costs for those exemptions for which estimates can be given are as follows:

	£ million
Annual exemption	200
£5,300—individuals; £2,650—trusts
Gains accrued but unrealised at death	60^*
Gains accruing to authorised investment and unit trusts	60^*
Gains accruing to life assurance policies^⋆	100^*
Residential letting	1
Traded Options: not treated as wasting assets	5^*
Relief for loans to traders	5^*
General roll-over relief for gifts (including transfers out of trusts)	50
Reliefs on compulsory purchase	3
^* These figures are particularly tentative and subject to a wide margin of error.
† On the assumption that there would be no relief for gains when disposal proceeds are applied to the purchase of another house and that there would be no consequential effects on length of ownership and on the housing market. Indexation of the acquisition costs will substantially reduce the cost in future years.
‡ Effect on receipts in 1982–83.
║ For capital transfer tax and capital gains tax most of the costs are on a receipts basis, that is, the revenue which would be lost assuming the exemptions and reliefs applied to the transactions on which the 1983–84 receipts were based. The exceptions are the capital gains tax exemption of life assurance policies and the exemption of the only or main residence, which are both on an accruals basis.
¶ This cost is in respect only of transfers for which an account is submitted to the capital taxes offices.
● Effect on receipts in 1983–84.
■ Including corporation tax on company gains.
⋆ It should be noted that in the absence of a capital gains charge on most life assurance disposals, certain gains from surrenders and maturities of life assurance policies are treated as income to be assessed for higher rate income tax.