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Welfare Tax Credits

Volume 502: debated on Wednesday 9 December 2009

To ask the Chancellor of the Exchequer what estimate he has made of the annual additional revenue to the Exchequer that would arise from the removal of the payment of tax credits to households with incomes above £50,000. (303864)

The total annual tax credit entitlement for families earning more than £50,000 is estimated to be approximately £45 million.

This estimate is based on finalised incomes and circumstances of families benefiting from tax credits in 2007-08 which is the most recent year available. These statistics are available at:

http://www.hmrc.gov.uk/stats/personal-tax-credits/ctcw-tax-credit-final-may09.pdf

Household income has been calculated based on income used to calculate tax credit entitlement and will therefore disregard in-year income rises of less than £25,000.

The total annual tax credits entitlement of these families will differ slightly from the additional revenue to the Exchequer of excluding them from tax credits, because of effects on over- and under-payments. Analysis of these effects is available only at disproportionate cost.

To ask the Chancellor of the Exchequer if he will estimate the level of second income threshold for tax withdrawal required to reduce annual expenditure on tax credits by £400 million. (303878)

To reduce total annual tax credit expenditure by £400 million, it is estimated that the second income threshold would need to be reduced to around £31,000.