HC Deb 09 December 1991 vol 200 cc302-3W
Mr. Tom Clarke

To ask the Chancellor of the Exchequer if he will estimate the effect on Treasury revenues in 1991–92 and in a full year of introducing an upper limit on all income tax allowances and reliefs of(a) £10,000, (b) £15,000 and (c) £20,000 a year, with (i) the current tax allowances and reliefs and (ii) limiting the following allowances and reliefs to the basic rate (1) the married couple's allowance, (2) age allowances, (3) relief on contributions to personal pensions and (4) relief on employee's contributions to occupational pension schemes, giving the revenue from each relief separately, the total revenue and the numbers of people affected, for Great Britain and Northern Ireland.

Mr. Maude

It is estimated that at 1991–92 levels of income the introduction of the upper limits specified would yield the following:

£ £ £
Upper limit for total allowances and reliefs 10,000 15,000 20,000
Yield in a full year under the current tax regime (£ million) 590 240 140
Yield following the restriction of specified reliefs and allowances to the basic rate (£ million) 410 180 110

The estimated yield from restricting all allowances, except the basic personal allowance, to the basic rate is about £300 million. The estimated yield from restricting relief on occupational pension contributions to the basic rate is about £250 million in a full year. About 800,000 people would lose as a result of this change. For personal pensions the yield would be about £150 million with some 300,000 people losing.

The number of people with total allowances and reliefs in excess of £10,000 is about 635,000. The corresponding figures for £15,000 and £20,000 are about 75,000 and 35,000 respectively. The estimates of revenue yield do not take account of any behavioural effects which might result from the introduction of such a limit.

Mr. Tom Clarke

To ask the Chancellor of the Exchequer what would be the revenue yield from the introduction of a 50 per cent. top rate of income tax on annual taxable incomes of (i) £31,705, (ii) £33,705, (iii) £36,705, (iv) £39,705 and (v) £42,705, (a) in the first year and (b) in a full year, assuming this is introduced at the beginning of 1991–92, and (c) in the first year and (d) in a full year, assuming this is introduced at the beginning of 1992–93, with (1) the current system of tax allowances and (2) limiting all tax allowances and reliefs (except the single person's allowance) to the basic rate, in Great Britain and Northern Ireland.

Mr. Maude

Estimates of the increase in liability to income tax are as follows. These do not allow for any behavioural effects that might result from such changes to the tax system and do not include capital gains tax.

Yield from introduction of a 50 per cent, income tax band
£ million
Threshold taxable income (£) With current tax structure Restricting allowances1 and reliefs to basic rate
1991–92 1992–93 1991–92 1992–93
31,705 2,330 2,540 3,650 3,960
33,705 2,170 2,360 3,460 3,740
36,705 1,960 2,130 3,210 3,470
39,705 1,790 1,940 3,010 3,240
42,705 1,640 1,780 2,830 3,050
1 Except the personal allowance.

Approximately one half of the full year yield from such a 50 per cent. band would affect income tax receipts in the year of its introduction.