4.An individual is entitled to a personal allowance for income tax. The amount depends upon the individual’s date of birth and income from 2013-14.
5.Up to 2012-13, an individual's personal allowance depends on their age. Finance Act 2012 made changes to the main income tax personal allowances. From 2013-14, there are still three main personal allowances, but availability will be by reference to date of birth. Section 4, Finance Act 2012 substitutes ‘born after 5 April 1948’ for ‘aged under 65’ in section 35 with effect from tax year 2013-14.
6.Income tax personal allowances are subject to indexation (an annual increase based upon the percentage increase to the retail prices index). Parliament can over-ride the indexed amounts by a provision in the Finance Act.
7.Autumn Statement 2012 announced that the basic personal allowance will be increased to £9,440 in 2013-14. This supersedes the corresponding amount announced at Budget 2012.
8.The table below sets out the amount of the personal allowance for those aged under 65 for 2012-13, the indexed amount for 2013-14 and the amount specified for this section for 2013-14 for those born after 5 April 1948:
| 2012-13 | 2013-14 indexed | 2013-14 by this section |
|---|---|---|
| £8,105 | £8,325 | £9,440 |
9.The effect of this section is to override the indexed amount for the personal allowance for those born after 5 April 1948. This section is part of a package of measures together, with a further section that sets the basic rate limit in an amount below indexation.
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