Background Note
6.An individual’s taxable income is charged to tax at the basic rate of tax up to the basic rate limit.
7.The basic rate limit is subject to indexation (an annual increase based upon the percentage increase to the retail prices index and, from 2015-16, the consumer prices index). Parliament can over-ride the indexed amounts by a provision in the Finance Bill.
8.Budget 2014 announced that the basic rate limit will be set at £31,785 for 2015-16.
9.The effect of this section is to override the anticipated indexed amount for the basic rate limit for 2015-16.
10.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.
11.Income tax personal allowances are subject to indexation (an annual increase based upon the percentage increase to the retail prices index, and from 2015-16 the consumer prices index). Parliament can over-ride the indexed amounts by a provision in the Finance Bill.
12.Budget 2014 announced that the basic personal allowance will be increased to £10,500 in 2015-16. As a consequence, it will be aligned with the personal allowance for those born after 5 April 1938 and before 6 April 1948.
13.The effect of this section is to override the indexed amount for the personal allowance for those born after 5 April 1948 that is anticipated to be lower than £10,500 in 2015-16, and make the consequential amendments to remove references to the personal allowance for those born after 5 April 1938 and before 6 April 1948 from ITA.