Direct Tax and National Insurance Contributions

Lord Woodley Excerpts

Tuesday 25th October 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

My noble friend makes a good point. The Government are committed to a fair tax system in which those with the most contribute the most, but one which also has to encourage saving. The income tax system, we believe, is highly progressive: the top 5% are projected to pay half of all income tax in 2022-23. My noble friend also cited the other statistic: the top 1% are projected to pay over—he said 30%—actually 28% of all income tax. Crucially, the top 10% of the income distribution are estimated to receive 35% of all income but pay over 60% of all income tax liabilities.

[Lord Woodley (Lab)]

My Lords, according to HMRC, most of the benefits of the lower rate of capital gains tax accrue to individuals resident in London and the south-east of England, and very little to less wealthy regions in the UK. Could the Minister please explain what assessment the Government have made of the impact of the capital gains tax regime upon regional incomes, and more importantly, wealth inequalities?

[Viscount Younger of Leckie (Con)]

The noble Lord may be aware that at Spring Budget 2021 the Government froze the capital gains tax annual exempt amount—the so-called AEA—at £12,300 until 2026. However, the Government keep the UK tax system under constant review, as I alluded to earlier, to ensure that it is fair and simple for all taxpayers.