Income Tax: Tax Allowances
(asked on 31st October 2018) - View Source
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to table 2.1 of Budget 2018, what estimate he has made of the cost of the public purse of (a) increasing the personal allowance to £12,500 and (b) increasing the higher rate threshold to £50,000, in each year of the forecast period.
A breakdown for the Exchequer impact of the changes to the Income Tax Personal Allowance (PA) and Higher Rate Threshold (HRT) announced at the Budget 2018 on 29 October 2018 is provided in Table 1.
Table 1: Exchequer Impact of Budget 2018 announcement– “Personal Allowance and Higher Rate Threshold: increase to £12,500 and £50,000 for 2019-20 and 2020-21”, and Exchequer Impacts of the Personal Allowance and Higher Rate Threshold Elements.
Budget 2018 announcement (£ million) | 2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 |
Personal Allowance and Higher Rate Threshold: increase to £12,500 and £50,000 for 2019-20 and 2020-21 | 0 | -2,790 | -1,935 | -1,445 | -1,605 | -1,780 |
of which |
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|
|
|
|
|
(i) Personal Allowance: increase to £12,500 for 2019-20 and 2020-21* | 0 | -1,980 | -885 | -600 | -650 | -725 |
(ii) Higher Rate Threshold: increase to £50,000 for 2019-20 and 2020-21 (given (i))** | 0 | -810 | -1,050 | -845 | -955 | -1,055 |
* This line assumes no change to the Basic Rate Limit (BRL).
** This line reflects the impact of increasing the HRT to £50,000, assuming the PA has been increased to £12,500.
The Exchequer impact above includes the impact from the Upper Earnings Limit and Upper Profits Limit for National Insurance being aligned with the Income Tax Higher Rate Threshold. Further information on the Exchequer impact from the “Personal Allowance and Higher Rate Threshold: increase to £12,500 and £50,000 in 2019-20 and 2020-21” measure can be found in “Budget 2018: policy costings”.
Totals may not sum due to rounding.