Background Note
6.Income tax is an annual tax. It is for Parliament to impose income tax for a year.
7.This section imposes a charge to income tax for the tax year 2014-15. It also provides the main rates of income tax for 2014-15: the 20 per cent basic rate, the 40 per cent higher rate and the 45 per cent additional rate.
8.An individual’s taxable income is charged to tax at the basic rate of tax up to the basic rate limit.
9.The basic rate limit is 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 Bill.
10.Budget 2013 announced that the basic rate limit will be set at £31,865 for 2014-15.
11.The table below sets out the amount of the basic rate limit for 2013-14, the indexed amount for 2014-15, and the amount specified by this section for 2014-15.
| 2013-14 | 2014-15 indexed | 2014-15 by this section |
|---|---|---|
| £32,010 | £33,100 | £31,865 |
12.The effect of this section is to override the indexed amount for the basic rate limit.
13.An individual is entitled to a personal allowance for income tax. From 2013-14 the amount depends upon the individual’s date of birth and income.
14.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 Bill.
15.Budget 2013 announced that the basic personal allowance will be increased to £10,000 in 2014-15.
16.The table below sets out the amount of personal allowance for 2013-14, the indexed amount for 2014-15 and the amount specified in this section for 2014-15: for those born after 5 April 1948.
| 2013-14 | 2014-15 indexed | 2014-15 by this section |
|---|---|---|
| £9,440 | £9,740 | £10,000 |
17.The effect of this section is to override the indexed amount for the personal allowance for those born after 5 April 1948.