Income Tax (Hansard, 23 March 1987)

§ Mr. Watts
asked the Chancellor of the Exchequer how much was paid in income tax by the top 5 per cent. of income earners in 1978–79 and in the most recent year for which figures are available; and whether he has any estimate of the total incomes of this group of taxpayers in each of those years.

§ Mr. Norman Lamont
In 1978–79 the total gross income of the top 5 per cent. of income tax payers (about 1.08 million married couples and single people) was about £15 billion and their tax liability was about £4.85 billion. The latest estimates for 1986–87 are that the top 5 per cent. of income tax payers comprise 1.03 million married couples and single people who have gross income of £38 billion and tax liabilities of about £11.2 billion.

§ Mr. Frank Field
asked the Chancellor of the Exchequer if he will publish a table giving the range and size of income tax cuts since 1979 in the same form as the answer to the hon. Member for Thurrock (Dr. McDonald) on 4 April 1985, Official Report, columns 705–6.

§ Mr. Norman Lamont
The table shows estimates of reductions in income tax liabilities at 1987–88 income levels of the proposed allowances, thresholds and rates for 1987–88 compared with an indexed 1978–79 regime. For the comparison, the 1978–79 allowances and thresholds have been indexed in line with the increase in the RPI between December 1977 and December 1986. As child tax allowances were being phased out in 1978–79 they have been excluded from the comparison.

Range of total income in 1987–88¹ Number of units paying tax in 1987–88 Reductions in income tax compared with 1978–79 indexed regime

£ (million) Amount
£ million
Average per tax unit
£

Under 5,000 3.20 350 ²85

5,000–10,000 7.60 1,950 ²250

10,000–15,000 5.30 2,550 480

15,000–20,000 2.70 1,950 710

20,000–30,000 1.60 2,000 1,240

30,000–50,000 0.60 1,450 2,380

Over 50,000 0.15 1,750 11,400

TOTAL 21.2 12,000 540

¹ All information is in terms of tax units — that is, married couples ae counted as one and their incomes combined.

² By reference to the estimated numbers who would be liable to pay tax under the indexed 1978–79 regime; this number is some 900,000 greater than the numbers paying tax in 1987–88, some 800,000 in the income range below £5,000 and 100,000 in the range £5,000 to £10,000.

Range of total income in 1987–88¹	Number of units paying tax in 1987–88	Reductions in income tax compared with 1978–79 indexed regime
£	(million)	Amount £ million	Average per tax unit £
Under 5,000	3.20	350	²85
5,000–10,000	7.60	1,950	²250
10,000–15,000	5.30	2,550	480
15,000–20,000	2.70	1,950	710
20,000–30,000	1.60	2,000	1,240
30,000–50,000	0.60	1,450	2,380
Over 50,000	0.15	1,750	11,400
TOTAL	21.2	12,000	540
¹ All information is in terms of tax units — that is, married couples ae counted as one and their incomes combined.
² By reference to the estimated numbers who would be liable to pay tax under the indexed 1978–79 regime; this number is some 900,000 greater than the numbers paying tax in 1987–88, some 800,000 in the income range below £5,000 and 100,000 in the range £5,000 to £10,000.