The below Parliamentary question was asked by Lord Rooker on 2014-04-03.
To ask Her Majesty’s Government whether they have commissioned any studies to assess behavioural change consequent upon income and corporate tax changes since 2010.
Lord Deighton
The table below sets out the Corporation Tax rates from 2009-10 to 2014-15.
|
Small Profits Rate |
Main Rate |
|
|
2009-10 |
21% |
28% |
|
2010-11 |
21% |
28% |
|
2011-12 |
20% |
26% |
|
2012-13 |
20% |
24% |
|
2013-14 |
20% |
23% |
|
2014-15 |
20% |
21% |
At Budget 2013 it was announced that from 2015-16 the rates would be unified to a single Corporation Tax rate of 20%.
The latest year for which full data is available is 2011-12. Total onshore Corporation Tax liabilities fell slightly from £35.6bn in 2010-11 to £35.4bn in 2011-12. HMRC publishes annual National Statistics on Corporation Tax liabilities. Table 11.1B is attached[1].
The table below sets out the Income Tax rates from 2000-10 to 2014-15.
|
Basic Rate |
Higher Rate |
Additional Rate |
|
|
2009-10 |
20% |
40% |
– |
|
2010-11 |
20% |
40% |
50% |
|
2011-12 |
20% |
40% |
50% |
|
2012-13 |
20% |
40% |
50% |
|
2013-14 |
20% |
40% |
45% |
|
2014-15 |
20% |
40% |
45% |
The Starting Rate of tax for savings is currently 10%. This is applied only to savings income which falls within the starting rate band above the personal allowance.
In 2014-15 the personal allowance is £10,000 and the starting rate band is £2,880. At Budget 2014 the Government announced that from 2015-16 that band would be increased to £5000 and the rate set to 0%.
The latest available income tax liability statistics held by HMRC relate to the tax year 2011-12. These statistics are attached[2].
Other more timely published information is available in tax receipts statistics which are published on a monthly basis and could be considered as a leading indicator of liabilities. These statistics are also attached[3].
To estimate the exchequer impact of policy changes it is necessary to estimate the change in tax liabilities after taking into account the behavioural response. At each fiscal event where the tax rates have been changed these estimates have been made and certified by the Office for Budget Responsibility. These estimates are published in table 2.1of the corresponding Budget and Autumn Statement reports.
There are significant behavioural responses associated with changes in the top marginal rate of income tax. The HMRC report ‘The Exchequer effect of the 50 per cent additional rate of income tax'[4] outlines these behavioural responses.
HM Treasury and HMRC jointly published the report ‘Analysis of the dynamic effects of corporation tax reductions’ at Autumn Statement 2013[5].
[1]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/256886/table11-1b.pdf
[2]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/277459/Table_2.6.pdf
[4]http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf
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