Taxation: Self-assessment

Treasury written question – answered on 22nd October 2008.

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Photo of Andrew Love Andrew Love Labour, Edmonton

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.

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

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.

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