§ Mr. HindTo ask the Chancellor of the Exchequer whether he has any proposals for amending the residence rules and the basis of liability to United Kingdom tax of resident individuals.
§ Mr. Norman LamontThe present rules on United Kingdom residence and domicile which determine the basis of an individual's liability to United Kingdom income tax and capital gains tax are complex, long-standing and lack a firm statutory basis. Possible changes to these rules need careful consideration and discussion. With my agreement, therefore, the Inland Revenue is today issuing a consultative document which suggests a possible approach to overcome the deficiencies of the present rules. The aim is to move in the direction of greater simplicity, certainty and neutrality, and to relate liabilities to United Kingdom tax more closely to the degree of an individual's connection with this country.
The Revenue is issuing a press release today giving further details. Comments on the consultative document should be received by 30 November. We shall carefully consider all comments and representations which are made before introducing any legislative changes. I have placed copies of the document in the Library.
Reduction in income tax liability under independent taxation for Quantile group based on income quantiles1 of all tax units2 £ million quantiles1 of married couples £ million quantiles3 of married people £ million Top 5 per cent. 400 260 90 Top 10 per cent. 440 400 140 Bottom 70 per cent. 160 210 450 Bottom 60 per cent. 130 200 430 Bottom 50 per cent. 100 170 400 Bottom 30 per cent. — 130 350 Bottom 10 per cent. — 50 200 All 670 670 670 1 Based on all income of tax unit, ie combining income of husband and wife. 2 Married couples and single people. 3 Based on each married person's own income. All estimates are provisional and subject to considerable uncertainty; and I regret that it is not possible to provide estimates for the top 1 per cent, of taxpayers.