Basic Pension Plus (Hansard, 19 March 1997)

§ Ms Harman
To ask the Chancellor of the Exchequer what estimate he has made of the change in the amount of tax which people on (1)(a) a quarter, (b) a half and (c) three quarters of average earnings and (2) average earnings can expect to pay (i) over their working life and (ii) over their lifetime under the proposed tax regime of the Government's basic pension plus proposal, relative to the existing tax regime. [20435]

§ Mr. Jack
[holding answer 17 March 1997]: The precise details of the scheme will be decided in the light of full consultation on the Green Paper. Estimates of the amount of tax paid by people over their working life and entire lifetime would also depend on the exact nature of changes in the tax regime, work patterns and life expectancy. Broadly speaking, over a lifetime, the two different tax treatments are equivalent from the saver's 621W point of view—apart from the treatment of the lump sum—as long as the person's marginal rates of tax are the same in work and in retirement.

§ Ms Harman
To ask the Chancellor of the Exchequer what will be the level in 2040 of the single and married person's tax allowances for those over the age of 65 years if these allowances are uprated in line with(a) prices and (b) earnings; and what proportion of average earnings this would represent. [20433]

§ Mr. Jack
[holding answer 17 March 1997]: Allowances at 1996–97 prices and the proportion of average earnings these represent are in the tables.

Income tax allowances (£) in 2040–41

Increased in line with

Prices Earnings¹

For people aged 65 to 74

Personal allowance 4,910 11,740

Married couple's allowance² 3,115 7,455

For people aged 75 and over

Personal allowance 5,090 12,170

Married couple's allowance² 3,155 7,545

¹ Assuming a 2 per cent. real growth in earnings each year and without statutory rounding in annual increase.

² Tax relief for these allowances is restricted to 15 per cent.

Proportion of average earnings in 2040–41 which income tax allowances represent

ased in line with

Prices Per cent Earnings Per cent

For people aged 65–74

Personal allowance 11 27

Married couple's allowance 7 17

For people aged 75 and over

Personal allowance 12 28

Married couple's allowance 7 17

Income tax allowances (£) in 2040–41
	Increased in line with
	Prices	Earnings¹
For people aged 65 to 74
Personal allowance	4,910	11,740
Married couple's allowance²	3,115	7,455
For people aged 75 and over
Personal allowance	5,090	12,170
Married couple's allowance²	3,155	7,545
¹ Assuming a 2 per cent. real growth in earnings each year and without statutory rounding in annual increase.
² Tax relief for these allowances is restricted to 15 per cent.

Proportion of average earnings in 2040–41 which income tax allowances represent
	ased in line with
	Prices Per cent	Earnings Per cent
For people aged 65–74
Personal allowance	11	27
Married couple's allowance	7	17
For people aged 75 and over
Personal allowance	12	28
Married couple's allowance	7	17