Section 57: Indexation of allowances
223.This section provides for the annual indexation of allowances. It is based on sections 257C and 265(1A) of ICTA.
224.Subsection (1) lists all the amounts within Chapters 2 and 3 of this Part that are subject to indexation.
225.Subsections (2) to (4) set out how the increases due to indexation are to be calculated. The words “unless Parliament otherwise determines” in section 257C(1) have been omitted as it is always open to a Finance Act to disapply this provision, so no express provision to this effect is needed.
226.Subsection (5) is an administrative provision to reflect the fact that it is usually only known at the time of the Chancellor’s Budget speech whether statutory indexation will apply. This leaves insufficient time before the start of the tax year for employers to update their payroll systems. This rule gives employers until the first pay-day after 17 May to make the necessary changes.
227.Subsection (6) obliges the Treasury to specify the indexed amounts in a statutory instrument which must be made in the tax year before the tax year to which they are to apply.
