HC Deb 05 March 1991 vol 187 cc93-5W
Mr. Beith

To ask the Chancellor of the Exchequer, pursuant to his answer of 18 December,Official Report, column 111, whether he has completed his consideration

Effects of changes for 1991–92 compared with 1990–91 income tax allowances and thresholds
Direct revenue cost
On receipts in 1991–92 In a full year at 1991–92 income levels Reduction in number of taxpayers
Increase in allowances1 by Compared with 1990–91 allowances (£ billion) Statutory indexation (£ billion) Compared with 1990–91 allowances (£ billion) Statutory indexation (£ billion) Compared with 1990–91 allowances (millions) Statutory indexation (millions)
(a) Increase in average earnings2 2.1 -0.3 2.9 -0.3 0.9 -0.1
(b) Change in RPI in year to December 1990 2.4 — 3.2 — 1.0 —
(c) 8 percent. 2.0 -0.4 2.7 -0.5 0.9 -0.1
(d) 5.5 per cent. 1.4 -1.0 1.9 -1.3 0.6 -0.3
1 And basic rate limit.
2 The working assumption used in the autumn statement of 8.5 per cent.

of the tax liability of hostages and refugees from Iraq and Kuwait who have been obliged to return home before the end of the tax year; and whether he will make a statement.

Mr. Maude

I am still considering the matter.

Mr. Nellist

To ask the Chancellor of the Exchequer how many tax units in the United Kingdom had(a) earnings, (b) total incomes per annum and (c) total assets exceeding (i) £70,000, (ii) £100,000, (iii) £250,000, (iv) £500,000 and (v) £1,000,000 in 1990–91; what was the percentage of the total in each category; and what were the comparable figures in 1978–79, adjusted for inflation.

Mr. Maude

The available information is given in the table:

Number of individuals (thousands) Percentage of taxpayers
1990–91
Earnings over £70,000 115 0.4
Total income for income tax purposes over £70,000 170 0.6
1978–79
Earnings over £27,700 20 0.1
Total income for income tax purposes over £27,700 30 0.1

Estimates of the value of assets of the United Kingdom population in 1990–91 are not yet available. Information for 1988 and earlier years is published in Economic Trends October 1990.

Mr. Nicholas Brown

To ask the Chancellor of the Exchequer what would be the cost in 1991–92 and a full year of increasing all personal allowances by(a) the current increase in average earnings, (b) the inflation rate in December 1990, (c) 8 per cent. and (d) 5.5 per cent.; what would be the impact in each case on the number of people paying tax; and what would be the average gain per person in each case for people on annual incomes of £5,000, £10,000, £15,000, £20,000, £30,000, £40,000 and £50,000 and over.

Mr. Maude

[holding answer 25 February 1991]: The latest estimates are given in the tables.

Average cash gains compared with 1990–91 allowances and thresholds
£ per year
Allowances and basic rate limit increased by
Total annual income of individuals in 1991–92 £ Increase in average earnings Change in RPI in year December 1990 8 per cent. 5.5 per cent.
5,000—10,000 80 90 80 50
10,000—15,000 90 100 80 60
15,000—20,000 90 100 80 60
20,000—30,000 120 130 110 80
30,000—40,000 390 440 370 260
40,000—50,000 420 470 400 280
Over 50,000 420 470 400 280

Mr. Nicholas Brown

To ask the Chancellor of the Exchequer what would be the cost of enabling married couples who wish to share the benefits of married couple's allowance equally between them to do so.

Mr. Maude

[holding answer 25 February 1991]: About £5 million in a full year at 1990–91 levels.

Mr. Nicholas Brown

To ask the Chancellor of the Exchequer how much revenue would be obtained if(a) personal tax allowances, (b) age allowance, (c) mortgage interest tax relief and (d) tax relief for occupational and private pensions were restricted to the basic rate in 1991–92 and in a full year.

Mr. Maude

[holding answer 25 February 1991]: Estimates for 1991–92 are not yet available.

The latest estimates of the direct revenue yields in a full year at 1990–91 levels of income from restricting the income tax reliefs and allowances to the basic rate are as follows:

£ million
Personal tax allowances 1,270
Age allowance1 nil
Mortgage interest relief 470
Relief on contributions to personal pensions2 3130
Relief on employee's contributions to occupational pension schemes 220
1 The extra component of the personal allowance given solely to aged taxpayers.
2 Including relief for retirement annuity premia and free standing additional voluntary contributions.
3 This estimate is subject to a wide margin of error.

The direct revenue yield from restricting all reliefs and allowances to the basic rate is likely to be in the order of £3 billion, somewhat more than the sums of the yields from restricting the reliefs and allowances separately; this is due to the cumulative effect of bringing more people into higher rate tax. About two-thirds of those who would pay more tax as a result of this change are currently liable only at the basic rate. No account is taken of possible behavioural changes or the effect on receipts of capital gains tax.