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Tax Allowances And Reliefs

Volume 202: debated on Tuesday 21 January 1992

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To ask the Chancellor of the Exchequer (1) if he will estimate the effect on Treasury revenues in a full year in (a) 1991–92 and (b) 1992–93 of introducing an upper limit on all income tax allowances and reliefs of (i) £10,000, (ii) £15,000 and (iii) £20,000 a year, (1) with the current tax allowances and reliefs, (2) limiting all personal tax allowances except the single person's allowance to the basic rate, (3) limiting relief on contributions to personal pensions to the basic rate and (4) limiting relief on employees' contributions to occupational pension schemes to the basic rate, giving the total revenue in each case and the numbers of people affected;(2) if he will estimate the effect on Treasury revenues in a full year in

(a) 1991–92 and (b) 1992–93 of introducing

an upper limit on all income tax allowances and reliefs of (i)£10,000, (ii)£15,000 and (iii)£20,000 a year, (1) limiting relief on contributions to personal pensions and occupational pension schemes to the basic rate, and (2) combining (1) with a limiting of all personal tax allowances except the single person's allowance to the basic rate, giving the total revenue in each case and the numbers of people affected;

(3) if he will estimate the effect on Treasury revenues in a full year in (a) 1991–92 and (b) 1992–93 of introducing an upper limit on all income tax allowances and reliefs of

(i) £10,000, (ii) £15,000 and (iii) £20,000 a year, and limiting all personal tax allowances except the single person's allowance to the basic rate, (1) limiting relief on contributions to personal pensions to the basic rate, and (2) limiting relief on employees' contributions to occupational pension schemes to the basic rate, giving the total revenue in each case and the numbers of people affected.

It is estimated that imposition of the specified limits for allowances and reliefs within the current income tax system would yield the following amounts in a full year at 1991-92 levels of income:

Limit £Yield £
10,000590
15,000240
20,000140
After restriction of the relevant allowances and reliefs to the basic rate, the estimated further yield from imposing the specified limits would be as follows:

Full year yield at 1991–92 incomes levels
£ million
Limit for total allowances and reliefs
After restriction to the basic rate of:£10,000£15,000£20,000
(a) All personal allowances
except the basic personal
allowance510230130
(b) Relief for personal pension
contributions490190110
(b) Relief for personal pension
Contributions490190110
(c) Relief for employees'
contribution to
occupational pension
schemes520230130
(d) Allowances and reliefs in
(a) and (b)440190110
(e) Allowances and reliefs in
(a) and (c)480220130
(f) Reliefs in (b) and (c)430180110
(g) Allowances and reliefs in
(a) and (b)(c)420180110
The number of people with total allowances and reliefs in excess of £10,000 is about 635,000. The corresponding figures for £15,000 and £20,000 are about 75,000 and 35,000 respectively. The estimates of revenue yield do not take account of any behavioural effects which might result from the introduction of the changes. It is not possible to provide detailed information for 1992–93.