§ Mr. Meacherasked the Chancellor of the Exchequer what has been the gain from the 1 p cut in the pound in income tax to a taxpayer with a wife and two children aged five and 11 years earning £5,000, £7,500, £10,000, £15,000, £20,000, £30,000, £50,000 and £100,000 per annum respectively.
§ Dr. McDonaldasked the Chancellor of the Exchequer (1) if he will up-date, to take account of the 1986 Budget, the information on income tax reductions provided in his reply of 4 April 1985 to the hon. Member for Thurrock, Official Report column 709–10;
(2) if, pursuant to the answer given on 25 February, Official Report, columns 502–8, about gains and losses from tax changes, he will show in each of the income ranges the number of units paying tax in 1986–87 and the aggregate and individual charges in 1986–87 compared with the indexed 1978–79 tax structure.
§ Mr. Moore[pursuant to his replies, 27 March 1986, c. 602 and 8 April 1986, c. 92]: The table shows the reductions in income tax liabilities, at 1986–87 income levels, of the proposed 1986–87 allowances, thresholds and rates compared with the 1978–79 regime indexed to 1986–87 levels by reference to the statutory formula. The comparisons therefore allow for budgetary changes in income tax rates and allowances, but not for any changes in the definition of the income tax base. As child tax allowances were being phased out in 1978–79, they have been excluded from the comparison.
315W
Range of total income in 1986–87* Number of units paying tax in 1986–87 Reductions in income tax compared with 1978–79 indexed regime £ (million) Amount £ million Average per† tax unit £ Under 5,000 3.8 280 60 5,000 to 10,000 7.8 1,420 180 10,000 to 15,000 4.9 1,720 350 15,000 to 20,000 2.2 1,160 530 20,000 to 30,000 1.3 1,210 930 30,000 to 50,000 0.4 1,030 2,320 Over 50,000 0.1 1,280 11,640 Total 20.5 8,100 380 * All information is in terms of tax units—that is, married couples are counted as one and their incomes combined. † Based on numbers of tax units liable to pay tax under the indexed 1978.79 regime; this is 900,000 units more than expected under the Budget proposals (covering about 1.4 million individuals if working wives are counted separately). 750,000 of these tax units have income below £5,000 and the remaining 150,000 have incomes between £5,000-£10,000. The levels of the main allowances and thresholds, compared with the proposed 1986–87 values, would be:
Personal allowances Indexed 1978–79 regime £ 1986–87 £ Single and wife's earned income allowance 1,985 2,335 Married man's allowance 3,095 3,655 Additional personal allowance 1,110 1,320 Aged single allowance 2,620 2,850 Aged married allowance 4,175 4,505 Aged income limit 8,100 9,400
Bands of taxable income Rate of tax (Percentage) Indexed 1978–79 regime 1986–87 £ £ 25 0–1,550 — 29 — 0–17,200 33 1,551–16,100 — 40 16,101–18,200 17,201–20,200 45 18,201–20,300 20,201–25,400 50 20,301–22,400 25,401–33,300 55 22,401–25,500 33,301–41,200 60 25,501–28,600 over-41,200 65 28,601–32,700 — 70 32,701–37,800 — 75 37,801–48,900 — 83 over 48,900 —
Investment Income Surcharge: Indexed 1978–79 regime Bands of net investment income (£) Non-aged Aged Rate of Surcharge (percentage) 0–3,450 0–5,050 Exempt 3,451–4,600 5,051–6,100 10 Over 4,600 over 6,100 15 Investment Income Surcharge was abolished in 1984–85.