HC Deb 28 July 1989 vol 157 cc1141-2W
Mr. Austin Mitchell

To ask the Chancellor of the Exchequer what is his estimate of the gain to the Revenue in the current financial year if the anomalies described in the discussion paper in the taxation of life assurance, including pension and annuity business, were to be corrected in favour of a neutral regime.

Mr. Lilley

The discussion paper "The Taxation of Life Assurance" set out the difficulties involved in making direct comparisons between life assurance and other media, and went far beyond a simple listing of anomalies. No perfectly neutral regime was identified in the document, and no estimate of tax yield from such a regime can be made. The discussion paper outlined three broad options for reform, but I have nothing to add about extra yield to the answer given to the hon. Member on 24 July at column544.

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer what is his estimate of the loss to the Revenue in 1988–89 and the forecast loss in the current financial year of single premium life assurance policies; and how much of the cost of writing such policies is offset against current profits.

Mr. Lilley

[holding answer 27 July 1989]: The value of single premium policies effected in 1988–89 is not known, and no forecast of figures for the current year can be made. Nor are figures available for the value of single premium policies in force in 1988–89; and it is therefore not possible to give any meaningful estimate of the difference in tax yield which could have resulted had moneys invested in such policies been placed elsewhere. The costs of writing single premium policies are currently deductible immediately and in full under the income less expenses system, but from 1 January 1990 they will be deductible on the deferred basis prescribed in section 86 of the current Finance Act.

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer whether he will publish in theOfficial Report a table showing which of the three key features of the wider tax regime applicable to investments listed in paragraph 3.3 of the 1988 consultative document on the taxation of life assurance apply to each of the options listed in paragraph 18 of the 1983 discussion document on the taxtion of pension funds; and what would be the consequential saving to the Revenue in the current financial year of (i) each option and (ii) taxing pension schemes on the same basis as unit trusts.

Mr. Lilley

[holding answer 27 July 1989]: This information could be provided only at disproportionate cost.