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Child Care Tax Allowance

Volume 205: debated on Tuesday 3 March 1992

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To ask the Chancellor of the Exchequer (1) if he will estimate the effect on Treasury revenues in 1992–93 of introducing an allowance against income tax of (a) £1,000 and (b) £2,000 for all working mothers, giving both full and first year costs;(2) if he will estimate the effect on Treasury revenues in 1992–93 of introducing an allowance against income tax of

(a) £1,000 and (b) £2,000 for all working mothers, with at least one child under age five years, giving both full and first year costs.

Estimates of the cost of introducing allowances against taxable incomes for working mothers and lone parents at 1992–93 levels are set out in the table:

Cost (£ billion) allowance of
(a) £1,000 per year(b) £2,000 per year
All working mothers10·61·2
All working mothers with a child under five10·20·3
1 Including lone parents who are working.

To ask the Chancellor of the Exchequer if he will estimate the effect on Treasury revenues in 1992–93 and in a full year of allowing the cost of child care against the income tax of (a) working mothers and (b) either partner in a two-earner couple, giving figures separately for children under five and those aged five to 16 years.

Information on child care costs paid by working mothers and by two-earner couples with different levels of income is not available. It is therefore not possible to estimate the cost of such a measure.

To ask the Chancellor of the Exchequer if he will estimate the effect on Treasury revenues in 1992–93 and in a full year of introducing a child care tax allowance of £50 a week for (a) working women and (b) either partner in a two-earner couple, assuming that relief is available at the basic rate only, giving figures separately for (i) all families with dependent children and (ii) families with at least one child under five years.

Estimates of the full year cost of introducing such an allowance in 1992–93 are set out in the table:

Cost (£ billion) Allowance of £50 per week restricted to basic rate relief and given to
(a) working mothers and lone parents(a) the higher earner in a twoearner couple
All families with dependent children11·42·2
Family with at least one child under the age of 50·40·8
1 Includes dependent children aged 16 to 18.

To ask the Chancellor of the Exchequer if he will estimate the effect on Treasury revenues in 1992–93 and in a full year of introducing a child care tax allowance of £50 a week for (a) working mothers and (b) either partner in a two-earner couple, giving figures separately for (i) all families with dependent children and (ii) families with at least one child under five years.

Estimates for 1992–93 are in the table:

Cost (£ billion) allowance of £50 per week given to
working mothers and lone parentsthe higher earner in a twoearner couple
All families with dependent children11·42·3
Family with at least one child under the age of five0·40·8
1 Includes dependent children aged 16 to 18.
Quantile group of taxpayersTotal income (£ million)Average income (£ million)Total earned income (£ million)Average earned income (£ million)
1990–91
Top 1 per cent.28107,4002078,000
Top 5 per cent.6853,0005442,200
Top 10 per cent.10139,6008432,800
Bottom 70 per cent.1608,9001458,100
Bottom 50 per cent.957,400866,700
Bottom 10 per cent.124,700114,200
All taxpayers35413,80031312,300
1991–92
Top 1 per cent.28113,0002288,400
Top 5 per cent.7156,3005947,200
Top 10 per cent.10642,0009136,200
Bottom 70 per cent.1669,4001528,700
Bottom 50 per cent.987,800897,200
Bottom 10 per cent.124,900114,400
All taxpayers36814,60033213,300