§ Mr. MacleanTo ask the Chancellor of the Exchequer what was the annual revenue raised from tax on bank and building society accounts from accounts taxed at(a) the starting rate of tax, (b) the basic rate of tax and (c) the higher rate of tax in each of the last three years. [117235]
§ Miss Melanie JohnsonBanks and building societies are required to deduct income tax at the lower rate of 20 per cent. before paying interest to savers. This satisfies the tax liability of lower and basic rate taxpayers. The additional tax liability of higher rate taxpayers (the difference between 20 per cent. and 40 per cent.) is administered through Self Assessment. Estimates for the liabilities are shown in the table. The increase over this period reflects higher deposit levels and interest rates.
Amounts of tax: £ billion Tax on interest liable at 20% lower rate Excess over 20% lower rate Total tax liability from bank and building society interest 1996–97 1.8 0.4 2.2 1997–98 2.3 0.5 2.8 1998–99 3.0 0.7 3.7