Taxation: Income Tax

House of Lords written question – answered on 3rd October 2011.

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Photo of Lord Ashcroft Lord Ashcroft Conservative

To ask Her Majesty's Government what are the estimated tax receipts by year of a top rate of income tax of (a) 40p, (b) 45p, and (c) 50p, for the next five years.

Photo of Lord Sassoon Lord Sassoon The Commercial Secretary to the Treasury

At Budget 2011, the following estimates were made:

Total income tax receipts 1 4 (£ billion)
Additional rate of Income Tax2 2012-13 2013-14 2014-15 2015-16
40 per cent3 164.5 177.0 189.2 201.5
45 per cent 165.2 178.8 190.9 203.4
50 per cent 165.7 180.0 192.1 204.6

1. Gross of tax credits. Income tax includes Pay As You Earn (PAYE) and self assessment receipts, and also includes tax on savings income and other minor income tax components.

2. Table shows additional rate of tax on total income excluding dividends income; additional rates of tax on dividends income are 42.5, 37.5 and 32.5 per cent respectively.

3. See Budget 2011 Table C.3.

4. Potential second order effects of a change in the additional rate on the wider economy and tax revenues are not included in these figures.

At Budget 2011, the Chancellor stated that Her Majesty's Revenue and Customs will assess the revenue raised by the 50p rate, once self-assessment data for 2010-11 are available.

The table above shows revenues with different top rates starting in 2012-13. Because of the timing of self-assessment returns, revenues from income tax rate changes are not fully realised in the first year.

The figures provided cannot be used to infer anticipated yield from the additional (50 per cent) rate introduced in 2010-11.

Expected revenues from the additional rate were set out in the March 2010 Budget document (table Al1, page 140) available at: http://webarchive. nationalarchives.gov.uk/20100407010852/http://www. hm-treasury.gov.uk/d/budget2010_complete.pdf

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