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Taxation: Capital Gains Tax
Lord Forsyth of Drumlean asked Her Majesty's Government:
In relation to capital gains tax for each year from 1995 to 1998, what assessment they have made of the cost of providing an indexation allowance; and [HL4364]
In relation to capital gains tax for each year from 1999 to 2004, what assessment they have made of the cost of providing taper relief. [HL4365]
Lord McKenzie of Luton: The estimated costs of indexation allowance, including rebasing to March 1982, for the years 1995 to 1998 are published in the Inland Revenue statistics for these years and are as follows.
| Year | Estimated Cost (£m) |
| 1994–95 | 850 |
| 1995–96 | 950 |
| 1996–97 | 950 |
| 1997–98 | 1,400 |
Estimated costs of taper relief for 1998–99 to 2004–05 are as follows.
| Year | Estimated Cost (£m) |
| 1998–99 | 50 |
| 1999–2000 | 150 |
| 2000–01 | 350 |
| 2001–02 | 550 |
| 2002–03 | 3,500 |
| 2003–04 | 2,750 |
| 2004–05 | 3,500 |
Figures show the cost of the reliefs. These costs are not the same as the yield from abolition of a relief as they do not take into account any behavioural changes that would occur if a relief were abolished.
Taxation: Corporation Tax
Lord Forsyth of Drumlean asked Her Majesty's Government:
Further to the Written Answer by the Lord McKenzie of Luton on 15 February (WA 183), for the latest year for which figures are available, what assessment they have made of the distribution of corporate tax receipts by different levels of corporate profits. [HL4466]
Lord McKenzie of Luton: The different levels of corporate profits for which companies are subject to different rates of corporation tax are provided in Table A.6 of HM Revenue and Customs statistics, which is available on HMRC's website at www.hmrc.gov.uk/stats/corporate–tax/rates–dec05.pdf.
Lord Forsyth of Drumlean asked Her Majesty's Government:
Further to the Written Answer by the Lord McKenzie of Luton on 15 February (WA 183), for the latest year for which figures are available, what is the cost to the Exchequer of providing marginal relief at the small companies rate. [HL4467]
Lord McKenzie of Luton: The cost to the Exchequer of providing marginal relief to those companies subject to the small rate of corporation tax but eligible for marginal relief against the small rate of corporation tax is £210 million.
In addition, the cost to the Exchequer of providing marginal relief to those companies subject to the main
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companies rate of corporation tax but eligible for marginal relief against the main companies rate of corporation tax is £410 million.
Lord Rana asked Her Majesty's Government:
Whether they will consider a reduction in corporation tax in Northern Ireland to the current level in the Republic of Ireland. [HL4476]
Lord McKenzie of Luton: The corporation tax regime is a UK-wide system and to introduce different rates in one part of the UK could distort competition.
Many companies trade in different regions of the UK. It would not be easy to determine the proportion of their profits liable at the "devolved" rate. In addition, such a measure could also create opportunities for some companies to manipulate the rules in order to benefit from the lower rate. This may well result in a system that would place a significant administrative burden on both businesses and the Government.
Taxation: Inheritance Tax
Lord Forsyth of Drumlean asked Her Majesty's Government:
For the latest year for which figures are available, what assessment they have made of the cost of increasing the inheritance tax threshold to (a) £500,000; (b) £750,000; and (c) £1,000,000. [HL4462]
Lord McKenzie of Luton: We estimate that raising the inheritance tax threshold in the year 2006–07 would reduce inheritance tax revenues accruing from deaths in that year by the following amounts:
| Inheritance tax threshold raised to: | Reduction in revenues generated: |
| £500,000 | £ 1.7 billion |
| £750,000 | £ 2.4 billion |
| £1,000,000 | £ 2.8 billion |
Lord Forsyth of Drumlean asked Her Majesty's Government:
For the latest year for which figures are available, what assessment they have made of the cost of providing relief against inheritance tax for agricultural property at (a) 50 per cent rate, and (b) 100 per cent rate; and [HL4463]
For the latest year for which figures are available, what assessment they have made of the cost of providing relief against inheritance tax for business property at (a) 50 per cent rate, and (b) 100 per cent rate. [HL4465]
Lord McKenzie of Luton: Estimates of the costs of both agricultural relief and business property relief in years 2004–05 and 2005–06 are published by HM Revenue and Customs in Table 1.5; tax expenditures and structural reliefs are available at www.hmrc.gov.uk/stats/tax–expenditures/l–5–dec05.xls.
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The split between relief provided at the different rates is as follows.
| Cost of agricultural relief (£ millions) | Cost of business property relief (£ millions) | |||
| 2004–05 | 2005–06 | 2004–05 | 2005–06 | |
| 50% Relief | 5 | 5 | 5 | 5 |
| 100% Relief | 210 | 220 | 175 | 195 |
Lord Forsyth of Drumlean asked Her Majesty's Government:
For the latest year for which figures are available, what assessment they have made of the number of estates subject to inheritance tax which are worth (a) less than £500,000; (b) greater than or equal to £500,000, but less than £750,000; (c) greater than or equal to £750,000, but less than £1,000,000; and (d) greater than or equal to £1,000,000. [HL4464]
Lord McKenzie of Luton: The number of taxpaying estates resulting from deaths in the year 2002–03 split by the value of the net estate (value of total assets less liabilities) is as follows.
| Value of net estate | Number of taxpaying estates |
| Up to £500,000 | 19,343 |
| £500,000 to £750,000 | 3,892 |
| £750,000 to £1,000,000 | 1,475 |
| Above £1,000,000 | 2,176 |
| Total | 26,886 |
Lord Forsyth of Drumlean asked Her Majesty's Government:
For the latest year for which figures are available, what assessment they have made of the cost of providing relief for inheritance tax purposes on gifts for the maintenance of family; and [HL4497]
For the latest year for which figures are available, what assessment they have made of the cost of providing the annual exemption of £3,000 for inheritance tax purposes. [HL4498]
Lord McKenzie of Luton: Table TB.2 of HMRC Statistics at www.hmrc.gov.uk/stats/tax expenditures/menu.htm lists the tax allowances and reliefs for which costs are not known. That list includes relief on gifts for the maintenance of the family and the exemption of gifts of £3,000 each year.
The cost of both exemptions is likely to be small because they are required only where the estate is larger than the zero rate threshold, and where the gifts are made no more than seven years before death.
Lord Forsyth of Drumlean asked Her Majesty's Government:
For the latest year for which figures are available, what assessment they have made of the size of bequests on death made to individuals, including charities, with or without a blood relationship to the deceased. [HL4500]
Lord McKenzie of Luton: The value of bequests from the year 2000–01 can be estimated from a small sample of approximately 1,000 cases. The results are as follows.
| Average value of bequest | Median value of bequest | |
| Relatives | £39,000 | £10,000 |
| Strangers in blood (individuals not related to the deceased) | £10,000 | £2,000 |
| Charities | £15,000 | £2,000 |
| All Bequests | £30,000 | £5,000 |
The bequests include those resulting from application of the intestacy laws.
The average values are highly influenced by a small number of very large cases. The median values show the midpoint value of the distribution of bequests.
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