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Tax Relief

Volume 972: debated on Friday 2 November 1979

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asked the Chancellor of the Exchequer what has been the total of tax relief granted in each year since 1960, respectively, for life assurance premiums, mortgage interest tax relief, employers' and employees' contributions

Estimated cost £ million
Life assurance reliefMortgage interest reliefApproved pension schemesEmployers' contributions to approved pension schemesRetirement annuity reliefAge allowance
1960–615370
1961–625875
1962–636175
1963–646490
1964–6566110
1965–66681357
1966–6770155
1967–6875180
1968–6984195
1969–7010023510
1970–7111028515025012
1971–7212031015025015¾
1972–73130365170300N.A.
1973–7414051025040030
1974–75157695340550N.A.
1975–7618589540065050215
,976–772001,09040075060295
1977–782401,04040085065260
1978–792601,1105001,00070265
1979–80415*1,4005001,150100300
* For 1979–80 relief for life assurance is given by deduction from the premiums payable to the life assurance company and not in the computation of income tax as in former years.
† The estimate for mortgage interest relief incorporates qualifying interest paid on bank loans which is not readily distinguishable in Inland Revenue statistics.
‡ The loss of revenue from granting tax relief to approved pension schemes has been calculated on the basis set out in the inland Revenue's note of February 1978 to the General Sub-Committee of the Expenditure Committee of House of Commons—second report 1977–78, appendix 15. The figures shown under the heading "approved pension schemes" include the cost of relief for employees' contributions, the cost of exempting funds' investment income and tax payable on pensions under these alternative arrangements, net of tax now payable on pensions. Employers' contributions in general qualify as a deduction as part of overall labour costs, under the normal rules for computation of profits. If, however, these contributions were made not deductible in calculating profits, the extra tax estimated to be payable by employers is shown separately in the table. I regret that information prior to 1970 is not available, nor has it been possible to allocate the cost amongst income groups.
All these figures are subject to a wide margin of error. It has been assumed for the purpose of these calculations that there would be no change in the nature and rate of pension provision, despite the large amounts of additional liability to tax.