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Life Assurance Premiums (Tax Relief)

Volume 982: debated on Tuesday 1 April 1980

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asked the Chancellor of the Exchequer, further to his reply dated 11 March concerning tax relief on life assurance, how many persons would be likely to benefit on average from replacing the present relief by an increase of £30 in the personal allowance; and how many would be worse off.

The estimated numbers of taxpayers affected within the ranges of total income for 1978–79, the last year for which the information is available, is as follows:

Number of taxpayers
Income rangeBenefitingWorse off
('000)
Below £2,0002,300200
£2,000–£10,00012,8754,925
£10,000–£12,000210290
£12,000–£16,000130170
£16,000–£20,0004060
£20,000 and over3070
The figures count married couples as one.

asked the Chancellor of the Exchequer, further to his reply dated 11 March concerning tax relief on life assurance, whether he will publish in the Official Report a table showing the net cost to the taxpayer in each band if the life assurance relief were replaced by a reduction in the basic rate of tax.

Replacement of life assurance relief which cost £260 million at 1978–79 income levels and tax rates would be represented by a reduction in basic rate for that year of approximately 0·6p. The net effect per taxpayer in the relevant income ranges would be as follows:

Range of total incomeAverage gain (+) or loss (-) to each taxpaying unit if life assurance relief replaced by a change in basic rate
£
Below £2,000-1·75
£2,000–£10,000+0·65
£10,000–£12,000-0·20
£12,000–£16,000-7·80
£16,000–£20,000-28·40
£20,000 and over-63·60