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Tax Reliefs And Allowances

Volume 115: debated on Tuesday 5 May 1987

The text on this page has been created from Hansard archive content, it may contain typographical errors.

asked the Chancellor of the Exchequer what is the aggregate value of the increase in tax reliefs and allowances of all kinds since May 1979 accruing to the richest 1 per cent., 5 per cent., 10 per cent., and 20 per cent., of earners; what is the breakdown by kind of relief or allowance; how many persons are in each of these categories; and what has been the average gain per earner in each of these categories.

Reductions in income tax liabilities in 1987–88 compared with the indexed 1978–79 tax regime
Source of income tax reduction (+)/increase (-)
Point of the income distribution1 in 1987–88
Top 1 per cent.Top 5 per cent.Top 10 per cent.Top 20 per cent.
Number of tax units2 in 1987–88—million0·21·12·14·2
Increases in personal allowances
Amount—£ million903806901,210
Average3 per tax unit—£ per year450360330290
Abolition of reduced rate band of 25p
Amount—£ per million-40-200-400-800
Average3 per tax unit—£ per year-170-190-190-190
Decrease in basic rate of 6p
Amount—£ million2601,2202,2003,620
Average3 per tax unit—£ per year1,2301,1501,040850
Increase in basic rate limit of £1,200
Amount—£ million130340410420

The information is available only for income tax personal allowances, thresholds and tax rates (including the investment income surcharge). Information in the table is given for the top 1 per cent, 5 per cent, 10 per cent. and 20 per cent. of taxpaying single people and married couples analysed by total income liable to tax. The table shows the reduction in income tax liabilities in a full year at 1987–88 income levels of the proposed 1987–88 income tax regime compared with the 1978–79 regime indexed to 1987–88 levels by reference to the statutory formula.

Point of the income distribution1 in 1987–88

Top 1 per cent.

Top 5 per cent.

Top 10 per cent.

Top 20 per cent.

Average3 per tax unit—£ per year600320190100
Changes in higher rate thresholds up to 60 per cent.
Amount—£ million590800800800
Average3 per tax unit—£ per year2,780750380190
Abolition of higher rates above 60 per cent.
Amount—£ million590590590590
Average3 per tax unit—£ per year2,780550280140
Abolition of investment surcharge
Amount—£ million290510610700
Average3 per tax unit—£ per year1,390480290160
Total reduction
Amount—£ million1,9203,6404,9006,530
Average3 per tax unit—£ per year9,0403,4302,3101,540

Note:—In the table, the effect of each change has been calculated on the assumption that each of the previous changes has already been made.

1 Based on 21·2 million single people and married couples expected to pay tax in 1987–88 and excluding a further 950,000 who would pay tax under the revalorised 1978–79 regime.

2 All information is in terms of tax units i.e. married couples are counted as one and their incomes combined.

3 By reference to the numbers paying tax in 1987–88.