To ask the Chancellor of the Exchequer
(1) what the average cost to HM Revenue and Customs is of processing a tax return; and how many tax returns would be obviated by increasing the thresholds in line with rental inflation;
(2) what the annual cost was of providing the rent-a-room tax scheme at the current threshold of £4,250 in each of the last five years; and what the annual cost would be of indexing the rent-a-room threshold in line with rental inflation from the £4,250 base set in 1997-98.
The average paybill cost of processing an income tax self assessment return in 2007-08 was £15.72. If the rent-a-room threshold had been increased in line with inflation since 1997-98 up to 5,000 taxpayers would have been taken out of self assessment.
The estimated tax cost of exempting income under the rent-a-room scheme is published in table A3.1 of Budget 2008.
The annual cost of increasing the rent-a-room threshold in line with rental inflation from the level of £4,250 set for 1997-98 is around £5 million.