§ Sir William Clarkasked the Chancellor of the Exchequer (1) what amount of extra revenue would accrue to the Exchequer in a full year if (a) lump sum payments to pensioners from pension funds were taxed at the standard rate, (b) employer's contributions to occupational pension funds were disallowed for corporation tax purposes and (c) employee's contributions to occupational pension funds were disallowed for income tax purposes;
(2) if he will estimate the amount of extra revenue which could accrue to the Exchequer if, in the case of occupational pensions (a) employers' contributions were not allowed as a charge against profits, (b) all investment income of occupational pension funds were taxed at the stadard rate, (c) all capital gains of occupational pension funds were taxed at the standard rate, (d) employers' contributions were taxed as a fringe benefit of the employee.
§ Mr. MooreThe estimates shown below are of the direct revenue effects of the reliefs on tax liabilities in 1984–85, taking the levels of pension contributions, pension fund investment income and pension payments that arise, given the existence of the reliefs. The figures cannot, therefore, be interpreted as indicating the tax yield which might result from a change in the tax rules, as no account has been taken of changes in levels and methods of provision for retirement that might occur following such changes. Each estimate has been calculated independently, and the combined effect of more than one cannot therefore be calculated by summing the figures.
492W
§ Mr. Moore[pursuant to his reply, 21 December 1984, c. 357]: The table gives the information requested for the financial years 1978–79 to 1984–85. The figures of average earnings are estimates for full-time males (all occupations) paid at adult rates. Earnings have been assumed to increase by 7½ per cent. between 1983–84 and 1984–85 — the underlying rate of increase assumed by the Government Actuary in his recent report.
Full year cost £ million Employees' contributions to occupational pension schemes allowed as a deduction for income tax purposes 1,250 Employers' contributions to occupational pension schemes allowed as a charge against profits for corporation tax purposes *†1,600 Employers' contributions not taxed as a benefit in kind of the employee *†2,100 Investment income of occupational pension funds (assuming tax at the basic rate) 2,500 Lump sum payments to pensioners (assuming tax at the basic rate) 900 * These estimates are particular tentative. † Alternatives. I regret that a reliable estimate of the cost of exempting capital gains realised by pension funds is not available.
The revenue that would accrue from abolition of these reliefs would also depend on any transitional provisions, designed to avoid retrospective taxation.