HC Deb 04 July 1988 vol 136 cc474-5W
Mr. Gordon Brown

To ask the Chancellor of the Exchequer (1) if he will give the estimated cost of tax relief on premiums on private medical insurance if the private medical sector were to achieve a turnover of(a) £0.7 billion, (b) £1 billion, (c) £2 billion, (d) £3 billion (e) £4 billion per year;

(2) if he will give the estimated cost of full tax relief on all existing private medical insurance over and above that already granted tax relief;

(3) if he will give a table showing the number of tax units, by marginal rate of tax, at present in receipt of private medical insurance paid for (a) in whole or (b) in part by their employer;

(4) if he will give a table showing the average value of private medical insurance by marginal rate of tax for those in receipt of medical insurance as a fringe benefit and the cost of introducing full tax relief on insurance at each of these marginal rates.

Mr. Norman Lamont

[holding answer 13 June 1988]: The table shows the estimated number of directors and higher paid employees (ie those whose earnings plus benefits exceed £8,500 per year) receiving the benefit of employer-paid private medical insurance benefits, the average value of this benefit and the direct revenue cost which would arise if this benefit were exempt from tax.

Net private medical insurance benefits provided by employers—1988–89
Number (thousands) Average value of benefit £ Cost of exemption (£ million)
Basic rate taxpayers 530 280 37
Higher rate taxpayers 255 430 43
TOTAL 785 330 80

A reliable breakdown of the number of recipients of this benefit between those for whom the employer pays all of the premiums and those where only part of the premium is paid is not available since information on employer-paid premiums which are reimbursed in whole or in part by the employee is not reported to the Inland Revenue in all cases.

The cost of granting tax relief on private medical insurance premiums paid by individuals, assuming no behavioural changes, is estimated to be about £150 million in a full year at 1988–89 levels. The cost of relief for private medical insurance premiums at the various alternative levels of turnover for the private medical sector suggested by the hon. Gentleman would depend on the distribution of the alternative level of premiums between policies paid by individuals and by employers and also on the marginal tax rate of the individuals and employers.