§ Mr. Maxwell-Hyslopasked the Prime Minster in the tax year commencing 5 April 1985, how much (a) a single person and (b) a wife with a working husband, can earn without becoming liable to pay-as-you-earn or national insurance charges; and why the two thresholds do not coincide.
§ The Prime MinisterA single person and a wife with a working husband can both earn up to £2,205 per year (equivalent to £42.40p per week) before becoming liable to income tax and £35.50p per week before becoming liable to national insurance contributions in the 1985–86 tax year. The starting points differ because the payments have different purposes. National insurance contributions finance specific benefits and payments carry wih them rights to such benefits. The starting point is set at a level that will enable the great majority of employees to build up benefit rights. Income tax is levied to finance general Government expenditure and the Government's aim is to increase the theshold and take the lowest paid out of tax. Income tax thresholds are 20 per cent. higher in real terms than they were in 1978–79.