Previous Section Index Home Page

4 Apr 2005 : Column 1174W—continued

Pension Funds

Mr. Webb: To ask the Chancellor of the Exchequer what plans he has to change the limits on the commutation of small pension funds into lump sums. [224261]

Mr. Timms: From 6 April 2006 there will be a facility for pension scheme members to commute trivial pensions and take the pension as a lump sum, where pension benefits have a total capital value of less than 1 per cent. of the lifetime allowance. The lifetime allowance will be £1.5 million at its introduction in April 2006, rising to £1.8 million by 2010. So, at the introduction of the simplified tax regime, the trivial commutation threshold will be £15,000. People in this position will be able to choose a year falling between their 60th and 75th birthdays in which all trivial pensions may be commuted.

The trivial commutation rules ensure that members will not be forced to purchase an annuity with very small amounts of pension savings which could prove to be uneconomic and disproportionately bureaucratic for both schemes and members.

The rules are the result of extensive consultation prior to legislation. As part of this consultation the Government published Simplifying the taxation of pensions: increasing flexibility for all" (December 2002) and Simplifying the taxation of pensions: the Government's proposals" (December 2003).

Property Values (Lancashire)

Mr. Hoyle: To ask the Chancellor of the Exchequer how many properties valued at between £60,000 and £120,000 there are in (a) Lancashire and (b) Chorley. [223788]

Dawn Primarolo: The Valuation Office does not hold statistics on the numbers of residential property within the value range indicated at current levels of value. The
4 Apr 2005 : Column 1175W
Valuation List however lists all residential property in England according to capital value as at 1 April 1991 for council tax purposes. As at 31 October 2004 residential properties in Lancashire (including Chorley) and Chorley were assessed for council tax in the following bands:
CT bandValue range (£)Total LancashireTotal Chorley
AUp to 40,000258,14513,836
B40,001 to 52,000123,6269,733
C52,001 to 68,000112,2038,241
D68,001 to 88,00068,8415,485
E88,001 to 120,00039,4314,133
F120,001 to 160,00018,1121,632
G160,001 to 320,00010,489716
HOver 320,00080662

The Valuation Offices's property market report indicates that levels of value in Lancaster for an average semi-detached property increased some 135 per cent. between spring 1991 and July 2004.


Mr. Amess: To ask the Chancellor of the Exchequer how many persons aged 17 and under have lived in Southend in each year since 1995. [223976]

Mr. Timms: The information requested falls within the responsibility of the National Statistician. I have asked him to reply.

Letter from Len Cook to Mr. David Amess, dated 4 April 2005:

Mid-year population estimates for those aged 17 and under


Office for National Statistics

Stability and Growth Pact

Keith Vaz: To ask the Chancellor of the Exchequer what assessment his Department has made of the likely effect on the economies of EU countries of the recent changes to the operation of the Stability and Growth Pact. [224141]

Mr. Timms: The Government have consistently argued for a prudent interpretation of the Stability and Growth Pact that takes account of country-specific factors including debt sustainability, the economic cycle and public investment.
4 Apr 2005 : Column 1176W

Tax Avoidance

Mr. Drew: To ask the Chancellor of the Exchequer what measures he is planning to put in place to enhance anti-avoidance measures for tax purposes at an international level. [224032]

Dawn Primarolo: The Chancellor announced a package of anti avoidance measures during his Budget speech which tackle the avoidance of UK tax by international tax planning.

Measures were announced to prevent the avoidance of capital gains tax by individuals and trusts. Action has also been taken to prevent individuals and companies manipulating the rules that give relief for overseas tax, and to strengthen the existing controlled foreign company rules.

Anti avoidance measures were also announced by the Chancellor which affect both UK and international avoidance, including action against avoidance through arbitrage, persons who act together and collectively control a business and avoidance using shares and derivatives in place of loans.

The Government are committed to creating a fairer tax system. Artificial and contrived tax avoidance schemes undermine fairness, at the expense of those who do not indulge in them.

Tax Credits

John Thurso: To ask the Chancellor of the Exchequer pursuant to the answer of 1 March 2005, Official Report, column 1064W, on tax credits, whether the omission of earnings of one partner on tax credits awards issued in 2003–04 occurred as a result of (a) human processing error and (b) a computer systems failure. [222429]

Dawn Primarolo: My earlier answer stated that the Inland Revenue is aware of a small number of occasions in 2003–04 when the earnings of one partner were omitted in a joint tax credits award. This error occurred when staff did not follow the correct procedure to update the tax credits computer system with more recent information about income.

Mr. George Osborne: To ask the Chancellor of the Exchequer what the take-up of (a) working tax credit, (b) child tax credit and (c) child care tax credit was in 2003–04. [223763]

Dawn Primarolo: Estimates of the take-up rate of child and working tax credit will not be available until household survey data for 2003–04 have been analysed. Subject to ensuring the data and methodology are sufficiently robust, we expect the analysis to be completed towards the end of 2005–06.

Latest statistics show that at 3 December 2004 5.9 million families were benefiting from these tax credits.

Mr. Willetts: To ask the Chancellor of the Exchequer if he will extend Table 3 on page 30 of Tax credits: reforming financial support for families" (March 2005) so as to show marginal deduction rates of over 50 per cent. and over 40 per cent. (a) before 1998 and (b) in 2005–06. [224664]

4 Apr 2005 : Column 1177W

Dawn Primarolo: The table is an extension of table 4.3 in Tax credits: reforming financial support for families", and also of table 4.2 in Budget 2005 (HC 372).
Marginal deduction
rate (percentage)

Before budget 1998
2005–06 system of tax and benefits
Over 1005,0000
Over 90130,00030,000
Over 80300,000165,000
Over 70740,000235,000
Over 60760,0001,730,000
Over 50760,0001,900,000
Over 40800,0002,095,000

Figures are cumulative. This table shows marginal deduction rates for working households in receipt of income related benefits or tax credits, where at least one person works 16 hours or more a week, where the head of the household is not disabled, and where higher earnings would lead to reduced benefits or tax credits. They include the marginal effects of income tax and national insurance contributions, and the withdrawal of housing benefit and council tax benefit.

This analysis does not take into account the way in which the new tax credits will respond to rises in income. The new tax credits only respond to rises in income in the current year of more than £2,500, disregarding the first £2,500 of any rise. This means that recipients will not see their tax credits reduced as soon as their income rises, so reducing the effective marginal deduction in any one year.

As a result of the Government's reforms, around half a million fewer low-income households now face marginal deduction rates in excess of 70 per cent. than did so in April 1998. The increase in the number of households facing marginal deduction rates of between 40 and 70 per cent. is primarily due to the introduction of tax credits, and more recently the extension of support to workers aged 25 or over without children. The number of heads that face an excess of 70 per cent. has fallen. This is because administrative data suggests a reported fall in the number of families on multiple tapers, i.e. non-disabled persons working more than 16hours in receipt of tax credits and housing benefit and/or council tax benefit.

Next Section Index Home Page