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Tax Allowances

Volume 715: debated on Thursday 26 November 2009

Question

Asked by

To ask Her Majesty's Government what is their latest calculation of the financial effect by income decile of making the personal allowance transferable between married couples and those in civil partnerships for each of the next five years. [HL72]

Due to the complex nature of this Question, the following estimates should be treated with caution. These estimates exclude any behavioural response to the change, which could be significant given the magnitude of the change.

Information on average gains by income decile of all UK households as a result of making personal allowances transferable between married couples and those in civil partnerships in 2009-10 are shown in the table below.

Average gain

Income decile

(£ per year)

Bottom

30

2nd

90

3rd

120

4th

140

5th

160

6th

200

7th

220

8th

240

9th

310

Top

380

These estimates have been calculated from HM Treasury’s tax and benefit static micro-simulation model using Family Resources Survey 2007-08 data uprated to 2009-10 levels of prices and earnings. The model does not take into account behavioural changes in response to changes to the tax and benefit system or economic conditions so if the model was used to produce the financial effect for five years, it would show similar results for each year.