Taxation: Personal Income

Treasury written question – answered at on 13 May 2011.

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Photo of Matthew Hancock Matthew Hancock Conservative, West Suffolk

To ask the Chancellor of the Exchequer

(1) what estimate he has made of the number of people who will no longer be eligible to pay income tax following his decision to increase the personal income tax allowance in April 2012 in each (a) region and (b) local authority area;

(2) what estimate he has made of the change to the level of income in (a) real terms and (b) cash terms following his decision to increase the personal income tax allowance for those aged under 65 years by £630 in April 2012;

(3) what estimate he has made of the number of people (a) nationally, (b) in each region and (c) in each local authority who will be affected by his decision to increase the personal allowance for those aged under 65 years in April 2012.

Photo of David Gauke David Gauke The Exchequer Secretary

The 2011 Budget announced a £630 cash increase in the personal allowance for under 65s to £8,105 in 2012-13 (£240 above indexation), with an equivalent reduction in the basic rate limit to leave the higher rate threshold unchanged.

For taxpayers benefiting from the personal allowance increase this represents a £48 real terms and £126 cash benefit. Those on incomes above £116,210 will pay £48 more in real terms and £126 in cash terms.

As a result of these measures, the Government estimates that 25 million taxpayers will benefit in 2012-13, among which 260,000 of the lowest income taxpayers will be removed from tax altogether. Information at Government Office Region is provided in the following table.

Thousand
Government Office Region Gainers Number taken out of income tax
North East 1,020 10
North West and Merseyside 2,680 28
Yorkshire and the Humber 2,000 26
East Midlands 1,820 18
West Midlands 2,140 25
East of England 2,350 25
London 3,170 30
South East 3,560 32
South West 2,170 24
Wales 1,130 10
Scotland 2,190 21
Northern Ireland 646 9
Address abroad/unknown 157 3
All 25,000 260

These estimates are based on the 2007-08 Survey of Personal Incomes, projected using economic assumptions consistent with the Office for Budget Responsibility’s March 2011 economic and fiscal outlook.

Reliable estimates are not available at the local authority level, due to greater uncertainties in projections for small geographical areas and small sample sizes.

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