In the exemption limits system, the principal distinction made is that on the grounds of age. The system was originally introduced to assist the elderly, including the widowed elderly. It was subsequently extended to the generality of the low paid. The general exemption limits of £4,100 single, £8,200 married rise to £5,000 — £10,000 for those aged 65 to 74, and to £5,500 — £11,000 for those aged 75 and over. In the 1998 budget, I introduced a significant increase in the exemption limits for the elderly and also indicated that it is proposed to eventually achieve a single exemption limit for all those aged 65 and over. These measures will benefit elderly widowed taxpayers, and in this context it is estimated that almost half of all widowed taxpayers are aged 65 and over.
The report of the expert group on the integration of the tax and welfare systems recommended the gradual abolition of the marginal relief system because of the high marginal tax rates and also the poverty traps associated with it for those returning to work. This recommendation has been implemented in successive budgets, for the general exemption limits, by increasing personal allowances by more than the exemption limits.