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Dept for Work and Pensions

Answer

Mr. Lilley: To ask the Secretary of State for Work and Pensions if he will estimate the combined deduction of taxation and pensions credit for an extra £1 of income to a pensioner paying tax and receiving pensions credit. [90660] Mr. McCartney: The combined deduction of taxation and pension credit for an extra £1 of income will depend on the individual characteristics of the person, such as age, family status, eligibility to addditional amounts and income level. The table shows an example of the deductions for a single person receiving pension credit and paying income tax, according to their gross income and age, assuming no additonal amounts in payment. Deduction of tax and pension credit for a single person paying tax and receiving Pension Credit [with no additional amounts]. _________________________________________________________________________________________________. Age Gross income (£ per Deduction per £1 Net increase in income Description week) per £1 60-64 88.75-103.60 1.00 0.00 Pension credit [guarantee only] + 10 per cent. tax 65-74 127.10-140.40 0.46 0.54 Pension credit [savings credit]+ 10 per cent. tax 75+ 129.25-140.20 0.46 0.54 Pension credit [savings credit] + 10 per cent. tax _________________________________________________________________________________________________. Notes: Calculations are for 2003-04 benefit and tax rates. The personal tax allowances are consistent with announcements made in the Pre-Budget Report 2002. Income tax bands have not yet been announced. For the purposes of this PQ they have been assumed to increase in line with normal indexation. Gross Income bands are defined using a 52-week year and then rounded to the nearest 5 pence. Taxation is defined as income tax only and excludes National Insurance contributions, which people below state pension age may pay. The effect of Housing Benefit and Council Tax Benefit is not included. The deductions and gross income bands may vary for people with entitlement to additional amounts in Pension Credit. Pension Credit entitlement is calculated according to post tax income. The guarantee within pension credit will be £102.10 for a single person in 2003-04 in net income terms. For single people, only those in the above income bands and age groups will be eligible for pension credit and be liable to pay income tax.

Secondary information

Type

Written question

Reference

90660; 400 c188W;400 c186W

Session

2002-03

Subjects

Deductions Income Pension credit Pensioners Taxation

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk