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Tax Allowances

Volume 455: debated on Thursday 18 January 2007

To ask the Chancellor of the Exchequer how many people aged over (a) 65 and (b) 75 years (i) have their income tax personal allowances reduced because of the income limit for the age-related allowance and (ii) are affected by similar reductions in the married couples’ income tax allowance. (116051)

Estimates for 2006-07 are provided in the following tables.

Numbers (000)

Age

Number of taxpayers who have their personal allowance tapered

65 to 74-year-olds

736

75-years-old and over

449

Numbers (000)

Age

Number of taxpayers who have had their married couples allowance (MCA) tapered

65 to 74-year-olds

71

75-years-old and over

137

Notes:

1. Estimates from the Survey of Personal Incomes 2003-04, projected forward to 2006-07 in line with December 2006 pre-Budget report assumptions.

2. MCA is a tax relief restricted to 10 per cent. and is available where either partner of a married couple or civil partnership was born before 6 April 1935.

3. In 2006-07 the aged personal allowances are £7,280 and £7,420 for 65 to 74-year-olds and 75-years-old and over respectively. The rates for MCA are £6,065 and £6,135 for 65 to 74-year-olds and 75-years-old and over respectively. The aged income limit is £20,100 and the minimum MCA is £2,350.

4. Figures do not include around 20,000 individuals for whom it is not possible to identify whether they have had their MCA tapered or their husband or civil partner has transferred to them the remainder of their MCA.

5. Aged personal allowances are tapered at the rate of £1 for every £2 of income above the aged income limit, to the level of the ordinary personal allowance (£5,035 in 2006-07).

6. For those entitled to MCA, it also is tapered at the rate of £1 for every £2 of income above the aged income limit, but only once an individual's personal allowance has been tapered to the level of the ordinary personal allowance. The MCA can only be withdrawn until it reaches the minimum MCA.