asked the Chancellor of the Exchequer if he will update, to take account of the 1985 Budget, the information on income tax reductions provided in his reply of 4 April 1984 to the hon. Member for Oldham, West (Mr. Meacher), Official Report, columns 542–44.
[pursuant to his reply, 28 March 1985]: The table shows the reductions in income tax liabilities at 1985–86 income levels of the proposed 1985–86 allowances, thresholds and rates compared with an indexed 1978–79 regime. For the comparison, the 1978–79 allowances and thresholds have been indexed in line with the increase in the RPI between December 1977 and December 1984. As child tax allowances were being phased out in 1978–79 they have been excluded from the comparison.It is not possible to provide useful estimates of the liabilities in 1985–86 for the 1978–79 regime without indexation since Inland Revenue records do not cover many of the people who would be brought into tax by such low levels of personal allowances. A partial analysis with incomplete coverage would be misleading.
| Range of total income in 1985–86* | Number of units paying tax in 1985–86 | Reductions in income tax compared with 1978–79 indexed regime | |
| Amount | Average per tax unit | ||
| £ | (million) | £ million | £ |
| Under 5,000 | 3·9 | 250 | †55 |
| 5,000–10,000 | 8·4 | 1,270 | 150 |
| 10,000–15,000 | 4·6 | 1,300 | 280 |
| 15,000–20,000 | 1·8 | 770 | 435 |
| 20,000–30,000 | 1·0 | 820 | 845 |
| 30,000–50,000 | 0·3 | 690 | 2,380 |
| Over 50,000 | 0·09 | 1,150 | 12,780 |
| Total | 20·1 | 6,250 | 300 |
| * All information is in terms of tax units—that is, married couples are counted as one and their incomes combined. | |||
| † By reference to the estimated numbers who would be liable to pay tax under the indexed 1978–79 regime; this number is some 850,000 greater than the numbers paying tax in 1985–86 under the Budget proposals. | |||
| Personal allowances | Indexed 1978–79 regime | 1985–86 |
| £ | £ | |
| Single and wife's earned income allowance | 1,875 | 2,205 |
| Married man's allowance | 2,925 | 3,455 |
| Additional personal allowance | 1,050 | 1,250 |
Personal allowances
| Indexed 1978–79 regime
| 1985–86
|
£
| £
| |
| Aged single allowance | 2,480 | 2,690 |
| Aged married allowances | 3,955 | 4·255 |
| Aged income limit | 7,700 | 8,800 |
Rate of tax (percentage)
| Bands of taxable income (£)
| |
Indexed 1978–79 regime
| 1985–86
| |
| 25 | 0–1,450 | — |
| 30 | — | 0–16,200 |
| 33 | 1,451–15,300 | — |
| 40 | 15,301–17,300 | 16,201–19,200 |
| 45 | 17,301–19,300 | 19,201–24,400 |
| 50 | 19,301–21,300 | 24,401–32,300 |
| 55 | 21,301–24,200 | 32,301–40,200 |
| 60 | 24,201–27,100 | Over 40,200 |
| 65 | 27,101–31,000 | — |
| 70 | 31,001–35,800 | — |
| 75 | 35,801–46,300 | — |
| 83 | Over 46,300 | — |
Investment Income Surcharge: Indexed 1978–79 regime
| ||
Bands of net investment income (£)
| ||
Non-aged
| Aged
| Rate of surcharge (percentage)
|
| 0–3,250 | 0,4,800 | Exempt |
| 3,251–4,300 | 4,801–5,800 | 10 |
| Over 4,300 | Over 5,800 | 15 |
Investment income surcharge was abolished in 1984–85.