§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer if he will estimate the(a) first year and (b) full year revenue yield from introducing a single, untapered, rate of capital gains tax of 40 per cent.; how this yield would change over each of the next 10 years; and if he will make a statement. [106508]
§ Dawn Primarolo[holding answer 24 January 2000]: The full year yields, first year and medium terms, of charging a 40 per cent. tax rate, irrespective of income, on the untapered gains of all individuals and trusts are shown in the table. Estimates are given after taking into account the likely effect on capital gains tax yield of changes to the volume and timing of disposals in a full year, caused by changes in taxpayers' behaviour. Capital Gains Tax liabilities for 2000–01 will normally be payable in 2001–02.
Capital gains made Charge all untapered gains to tax at 40 per cent. Full year yield 2000–01 £ million Full year yield Medium term £ million With behavioural effects (volume and timing) 600 800 Capital gains made by companies, including those gains of insurance companies which are attributable to policy holders, are chargeable to corporation tax and, as such, excluded from the above figures.
§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer what is his estimate of the revenue yield from abolishing capital gains tax relief on gains accrued but unrealised at death; and if he will make a statement. [106460]
§ Dawn Primarolo[holding answer 24 January 2000]: The latest available estimate of the cost of Capital Gains Tax relief for gains accrued but unrealised at death is £850 million for 1999–2000.
In practice, the yield from abolition of the relief may be significantly different from the existing cost owing to changes in taxpayers' behaviour.
§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer if he will estimate the annual(a) first year and (b) full year revenue yield from reducing the capital gains tax annual exempt amount for individuals to (i) £5,000, (ii) £2,500 and (iii) zero; and if he will make a statement. [106507]
§ Dawn Primarolo[holding answer 24 January 2000]: The full year yields from reducing the Annual Exempt Amount to £5,000 and £2,500 respectively from 2000–01 are shown in the table. Estimates are given after taking into account the likely effect on capital gains tax yield of changes to the volume of disposals in a full year, caused by changes in taxpayers' behaviour. Capital Gains Tax liabilities for 2000–01 will normally be payable in 2001–02.
214W
Reducing annual exempt amount to: Full year yield 2000–01 £ million Full year yield medium term £ million With behavioural effects £5,000 100 150 £2,500 350 450 Comparable estimates for very low levels of the AEA, and zero in particular, cannot be made with sufficient precision as some of the underlying assumptions become increasingly inappropriate and the effect of taxpayers' behaviour cannot be estimated reliably.
However, the latest estimate of the cost of the Annual Exempt Amount is £2,000 million for 1999–2000.