The Income Tax (Indexation) Order 2000

Explanatory Note

(This note is not part of the Order)

Sections 1(6) and 257C(3) of the Income and Corporation Taxes Act 1988 (“the Act”) operate to provide that the Treasury shall by order made by statutory instrument before 6th April 2000 specify the amounts which by virtue of those sections shall, unless Parliament otherwise determines, be treated as specified for the year 2000–01.

This Order specifies the relevant amounts for the purposes of section 1(2) (starting rate and basic rate limits), section 257(2), (3) and (5) (personal allowances for persons of 65 or more), section 257A (married couple’s allowances for those born before 6th April 1935) and section 265(1) (blind person’s allowance) of the Act for the year 2000–01.

The starting rate limit specified in section 1(2)(aa) replaced the lower rate limit with effect from 6th April 1999.

The relevant amount for the purposes of section 257(1) of the Act (basic personal allowance) was specified by the Income Tax (Indexation) (No. 2) Order 1999 (S.I. 1999/3038). By virtue of section 31(2) of the Finance Act 1999 section 257A(1) (basic married couple’s allowance) ceases to have effect after the year 1999–00.

The relevant amounts for the purposes of sections 1(2)(b) (basic rate limit), 257(5) (income limit for age-related personal allowances), 257A(2) and (3) (age-related married couple’s allowance) and 265(1) (blind person’s allowance) of the Act were specified for the year 1999–00 by the Income Tax (Indexation) Order 1999 (S.I. 1999/597). The relevant amount for the purposes of section 1(2)(aa) (starting rate limit) was specified for the year 1999–00 by section 22 of the Finance Act 1999. The relevant amounts for the purposes of section 257(2) and (3) (age-related personal allowances) were specified for the year 1999–00 by section 24(1) of the Finance Act 1999. The relevant amount for the purposes of section 257A(5A) (minimum married couple’s allowance) was specified for the year 1999–00 by section 31(7) of the Finance Act 1999.

Following the amendments to sections 1(4) and 257C(1) of the Act made by section 107(1) to (3) of the Finance Act 1993, the amounts in sections 1(2)(aa) and (b), 257(2), (3) and (5), 257A(2), (3), (5) and (5A) and 265(1) of the Act are increased by this Order in accordance with the percentage increase in the retail prices index for September 1999 over that for September 1998. Certain of the amounts have been rounded up to the nearest £100 in accordance with sections 1(4)(b) and 257C(1)(a) of the Act and, in the case of the other amounts, the amounts or the increases have been rounded up to the nearest £10 in accordance with sections 1(4)(a) and 257C(1)(b) of the Act.

The “retail prices index” is defined in section 833(2) of the Act, as amended by paragraph 22 of Schedule 2 to the Transfer of Functions (Registration and Statistics) Order 1996 (S.I. 1996/273), as the “general index of retail prices (for all items) published by the Office for National Statistics”. The retail prices index for September 1998 is 164.4 and for September 1999 166.2 (based on January 1987 as 100) (see Table 3.1 on page T28 of the November 1998 issue (No. 552) of Economic Trends, a publication of the Government Statistical Service).