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Income Tax: Tax Allowances

Volume 474: debated on Thursday 24 April 2008

To ask the Chancellor of the Exchequer (1) by how much the personal allowance would need to be increased in order to remove an additional (a) 500,000, (b) 1,000,000 and (c) 1,500,000 people from income tax liability; and what the cost would be; (201463)

(2) what increase in the personal allowance would be created by an increase in funding of £8 billion; and how many people would be removed from any income tax liability as a result of such an increase.

Approximate estimates for 2008-09 can be found in the following table.

Increase in personal allowance1

Cost2 (£ billion)

Number taken out of tax (thousand)

£470

5.5

500

£690

8.0

700

£960

11.1

1,000

£1,430

16.4

1,500

1 Personal allowance for individuals below the age of 65.The personal allowances for individuals aged 65 and over are assumed to stay the same.

2 Includes the accruals cost of both income tax and national insurance contributions

The income tax information is based on the Survey of Personal Incomes 2005-06 projected in line with Budget 2008 assumptions. The national insurance contributions estimates are taken from the NICs forecasting model based on the Annual Survey of Hours and Earnings 2004-05 uprated in line with Budget 2008 assumptions. The figures exclude any estimate of behavioural response.