| 7 household income and expenditure |
|
| New Earnings Survey |
| 7.1 The New Earnings Survey is a one per cent
sample survey of the earnings of employees in employment in Great Britain in all
occupations, in all types and sizes of businesses, and in all industries. It is carried
out annually by the Office for National Statistics under the Statistics of Trade Act,
1947. Information about employees is obtained from their employers, including various
characteristics of the employees and their earnings and hours for a pay-period including a
reference date in April. The earnings include all monetary payments for the period,
including overtime pay, shift and other premium payments, bonuses, commission before
income tax, National Insurance and other deductions. Payments in kind are generally
excluded, except for the value of certain benefits to some agricultural and catering
workers. These tables cover only full-time employees whose pay for the survey pay-period
was not affected by absence. The figures relate to those on adult rates. Total weekly
hours comprise paid overtime hours together with the basic hours which the employee is
expected to work in a normal week, excluding main meal breaks. No account is taken of
unpaid overtime hours. The definition of ‘full-time’ workers means those whose
normal basic hours exceed 30 hours per week (25 or more for teachers) and those without
specified hours who are regarded as full-time workers by their employers. |
| 7.2 The sample comprises employees whose
National Insurance numbers end with a specified pair of digits; they are identified in the
records of PAYE schemes by Inland Revenue tax offices at the time when new deduction cards
are being prepared for issue to employers. The survey does not in general cover those
(mainly part-time employees) with earnings below the deduction card limits. Private
domestic servants and employees working outside Great Britain are excluded. |
|
| Survey of Personal Incomes |
| 7.3 The data in tables 7A3,
7A4 and 7A5 are taken from the Inland Revenue’s annual Survey of Personal
Incomes. The survey is based on a sample of individuals for whom tax offices hold records.
Individuals with no tax records are not therefore covered in the tables. There may, for
instance, be no record if an individual’s income is less than the Pay-As-You-Earn
(PAYE) threshold (e.g. £3,525 in 1995-96). The tables may however, cover some individuals
whose income is above the PAYE threshold even though their allowances and reliefs render
them not liable to tax. |
| 7.4 Figures in table 7A3 refer to
individuals throughout, counting married couples as two persons, even for the years prior
to the advent of independent taxation in 1990-91. |
| 7.5 The sample size of the Survey is
currently some 80,000 individuals. Usable information is obtained from about 95 per cent
of them, from tax offices, and around 5,700 of the usable sample are residents of
Scotland. The sample size for some estimates is therefore quite small, so year on year
changes should be interpreted with particular care; sampling error can often account for
changes in the estimates. |
| 7.6 Only income liable to tax appears in
these tables. Profits and professional earnings are shown net of allowable losses and
capital allowances. Generally profits assessable to tax in a year are those earned in the
business accounting period ending in the previous year. They include earnings chargeable
under Cases IV to VI of Schedule D. Estimates of superannuation are included in figures
for employment income and total income. For a full definition of the components of income
see "Inland Revenue Statistics 1995". |
| 7.7 On much investment income, payment of
basic rate tax is satisfied at source and there may be no operational reason for the tax
office to know about it. As a result the Survey tends to underestimate these components of
investment income. Estimates of such missing investment income are included in the figures
for total income. However, investment income is not separately distinguished in these
tables because the margin for error inherent in estimating it for Scotland is too great. |
| 7.8 The detailed tables for 1993-94 give
estimates of tax liability for Scotland which do not take into account Mortgage Interest
Relief at Source (MIRAS). Tax offices have no operational need to know about MIRAS. |
|
| Family Expenditure Survey
(FES) |
| 7.9 The Family Expenditure Survey covers all
types of private households in the United Kingdom. 6,415 households took part in the UK
survey in 1996-97, and of these 555 were in Scotland. The survey is primarily concerned
with expenditure on goods and services by households; the income information it collects
is basically to enable households to be classified into income groups. Expenditure on
goods and services excludes several important groups of payments:- |
| a. Income Tax and National
Insurance contributions. b. Life assurance premiums
and other payments of a savings nature. |
| It follows, therefore, that the difference
between expenditure and income as measured in the survey should not be equated with saving
or dis-saving. |
| 7.10 Expenditure on goods and services may be
financed in other ways than from income. Information on changes in assets is not
collected, and income in the survey excludes withdrawals of savings, receipts from
maturing insurance policies, from the repayment of loans, or from sale of assets, loans,
and other gains or windfalls. Although most of the income information obtained is on a
current basis, income from investment, self-employment and some other sources relate to a
previous 12 month period; thus not all the information relates to a common period of time.
Consequently there inevitably will be households for which expenditure exceeds income,
even after allowing for income tax and national insurance contributions. Some households,
particularly those of retired persons, live on capital while others will be drawing on
savings during the period they are surveyed. |
| 7.11 The figures shown in some tables relate
to financial years i.e. April 1 to March 31. |
| 7.12 Amounts for Council Tax, collected
centrally from local authorities, are included within housing expenditure. |
