Income Tax Act 2007

Chapter 2 U.K. Rates at which income tax is charged

The rates U.K.

6 F1 The ... basic rate[F2 , higher rate and additional rate] U.K.

(1) The main rates at which income tax is charged are—

F3 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the basic rate, F4 ...

(c) the higher rate [F5 , and

(d) the additional rate.]

(2) The F6 ... basic rate [F7 , higher rate and additional rate] for a tax year are the rates determined as such by Parliament for the tax year.

F8 (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8 (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8 (2C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) For other rates at which income tax is charged see—

F9 (za) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F10 (zc) section 6C (default basic, higher and additional rates),]

[F11 (a) section 7 (starting rate for savings [F12 and savings nil rate]),]

[F13 (aa) section 7A (savings basic, higher and additional rates),]

(b) section 8 ([F14 dividend nil rate,] dividend ordinary rate [F15 , dividend upper rate and dividend additional rate]), and

(c) section 9 (trust rate and dividend trust rate).

[F16 (4) See also section 80C of the Scotland Act 1998 which makes provision for the purposes of section 11A (income charged at Scottish rates).]

Textual Amendments

F1 Words in s. 6 heading omitted (21.7.2008 with effect in accordance with s. 5(6) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 5(5)

F2 Words in s. 6 heading substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 2(3)

F3 S. 6(1)(a) omitted (21.7.2008 with effect in accordance with s. 5(6) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 5(2)

F4 Word in s. 6(1)(b) omitted (with effect in accordance with s. 6(6) of the amending Act) by virtue of Finance Act 2009 (c. 10), s. 6(2)

F5 S. 6(1)(d) and preceding word inserted (with effect in accordance with s. 6(6) of the amending Act) by Finance Act 2009 (c. 10), s. 6(2)

F6 Words in s. 6(2) omitted (21.7.2008 with effect in accordance with s. 5(6) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 5(3)

F7 Words in s. 6(2) substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 2(2)

F8 S. 6(2A)-(2C) omitted (with effect in accordance with Sch. 38 para. 12 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 38 para. 2(a)

F9 S. 6(3)(za) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(14), 14(3)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F10 S. 6(3)(zc) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(5)(a)(24); S.I. 2016/1161, regs. 2, 3

F11 S. 6(3)(a) substituted (21.7.2008 with effect in accordance with s. 5(6) of the amending Act) by Finance Act 2008 (c. 9), s. 5(4)

F12 Words in s. 6(3)(a) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(2)(17)

F13 S. 6(3)(aa) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(5)(b)(24); S.I. 2016/1161, regs. 2, 3

F14 Words in s. 6(3)(b) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(2)(10)

F15 Words in s. 6(3)(b) substituted (with effect in accordance with s. 6(6) of the amending Act) by Finance Act 2009 (c. 10), s. 6(3)

F16 S. 6(4) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(14), 14(4)(15), 72(3); S.I. 2016/1161, regs. 2, 3

[F17 6A The Scottish basic, higher and additional rates U.K.

(1) The Scottish basic rate, the Scottish higher rate and the Scottish additional rate for a tax year are calculated as follows.

• Step 1 Take the basic rate, higher rate or additional rate.

• Step 2 Deduct 10 percentage points.

• Step 3 Add the Scottish rate (if any) set by the Scottish Parliament for that year.

(2) For provision about the setting of the Scottish rate, see Chapter 2 of Part 4A of the Scotland Act 1998.]

Textual Amendments

F17 S. 6A inserted (with effect in accordance with Sch. 38 para. 12 of the amending Act) by Finance Act 2014 (c. 26), Sch. 38 para. 3

7 The starting rate for savings [F18 and savings nil rate] U.K.

[F19 (1)] The starting rate for savings is 0%.

[F20 (2) The savings nil rate is 0%.]

Textual Amendments

F18 Words in s. 7 heading inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(3)(c)(17)

F19 S. 7 renumbered as s. 7(1) (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(3)(a)(17)

F20 S. 7(2) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(3)(b)(17)

8 The [F21 dividend nil rate,] dividend ordinary rate[F22 , dividend upper rate and dividend additional rate] U.K.

[F23 (A1) The dividend nil rate is 0%.]

(1) The dividend ordinary rate is [F24 7.5%].

(2) The dividend upper rate is 32.5%.

[F25 (3) The dividend additional rate is [F26 38.1%].]

Textual Amendments

F21 Words in s. 8 heading inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(3)(a)(10)

F22 Words in s. 8 heading substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 3(3)

F23 S. 8(A1) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(3)(b)(10)

F24 Word in s. 8(1) substituted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(3)(c)(10)

F25 S. 8(3) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 3(2)

F26 Word in s. 8(3) substituted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(3)(d)(10)

9 The trust rate and dividend trust rate U.K.

(1) The trust rate is [F27 45%].

(2) The dividend trust rate is [F28 38.1%].

Textual Amendments

F27 Words in s. 9(1) substituted (17.7.2012) (with effect in accordance with s. 1(6) of the amending Act) by Finance Act 2012 (c. 14), s. 1(3)(b)

F28 Word in s. 9(2) substituted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(4)(10)

Income charged at particular rates U.K.

[F29 9A Overview of sections 10 to 15 U.K.

The general effect of sections 10 to 15 is outlined in the following table—

Type of taxpayer	Rates payable on savings income	Rates payable on most dividend income	Rates payable on other income
UK resident individual who is neither a Scottish taxpayer nor a Welsh taxpayer	Savings rates	Dividend rates	Main rates
Scottish taxpayer	Savings rates	Dividend rates	Scottish rates
Welsh taxpayer	Savings rates	Dividend rates	Main rates while section 11B is not in force; Welsh rates if that section is in force
Non-UK resident individual	Savings rates	Dividend rates	Default rates
Non-individual, except that some trustees in some circumstances are subject instead to the trust rate or the dividend trust rate	Default basic rate	Dividend ordinary rate	Default basic rate

Note: the table does not address the effect of some exceptions referred to in sections 10 to 15.]

Textual Amendments

F29 S. 9A inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(2)(24); S.I. 2016/1161, regs. 2, 3

10 Income charged at the F30 ... basic [F31 , higher and additional] rates: individuals U.K.

F32 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F33 (2) Income tax on an individual's income up to the basic rate limit is charged at the basic rate F34 ....]

(3) Income tax is charged at the higher rate on an individual's income above the basic rate limit [F35 and up to the higher rate limit.]

[F36 (3A) Income tax is charged at the additional rate on an individual's income above the higher rate limit.]

F37 (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F37 (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) This section is subject to—

• F38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• [F39 section 11A (income charged at the [F40 Scottish] rates),]

• [F41 section 11C (income charged at the default basic, higher and additional rates: non-UK resident individuals),

• section 11D (savings income charged at the savings basic, higher and additional rates: individuals),

• section 12 (savings income charged at the starting rate for savings),]

• [F42 section 12A (savings income charged at the savings nil rate),]

• section 13 (income charged at the dividend ordinary and dividend upper rates: individuals), and

• any other provisions of the Income Tax Acts which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(5) The basic rate limit is [F43 £31,785].

[F44 (5A) The higher rate limit is £150,000.]

[F45 (6) The basic rate limit [F46 and higher rate limit are] increased in some circumstances: see—

(a) section 414(2) (gift aid relief), and

(b) section 192(4) of FA 2004 (relief for pension contributions).

(7) See section 21 for indexation of the basic rate limit.]

Textual Amendments

F30 Word in s. 10 heading omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 3(6)

F31 Words in s. 10 heading substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 4(6)

F32 S. 10(1) omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 3(2)

F33 S. 10(2) substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 3(3)

F34 Words in s. 10(2) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(6)(24); S.I. 2016/1161, regs. 2, 3

F35 Words in s. 10(3) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 4(2)

F36 S. 10(3A) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 4(3)

F37 S. 10(3B)(3C) omitted (with effect in accordance with Sch. 38 para. 12 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 38 para. 4(a)

F38 S. 10(4) entry omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 3(4)

F39 Words in s. 10(4) inserted (with effect in accordance with Sch. 38 para. 12 of the amending Act) by Finance Act 2014 (c. 26), Sch. 38 para. 4(b)

F40 Word in s. 10(4) substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(6)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F41 Words in s. 10(4) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(7)(24); S.I. 2016/1161, regs. 2, 3

F42 Words in s. 10(4) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(4)(17)

F43 Sum in s. 10(5) substituted (6.4.2015 for the tax year 2015-16) by Finance Act 2014 (c. 26), s. 2(1)(a)

F44 S. 10(5A) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 4(4)

F45 S. 10(6)(7) inserted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 3(5)

F46 Words in s. 10(6) substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 4(5)

11 Income charged at the [F47 default basic rate: non-individuals] U.K.

(1) Income tax is charged at the [F48 default] basic rate on the income of persons other than individuals.

(2) This section is subject to—

• F49 ...

• section 14 (income charged at the dividend ordinary rate: other persons),

• Chapters 3 to 6 of Part 9 (which provide for some income of trustees to be charged at the dividend trust rate or at the trust rate), and

• any other provisions of the Income Tax Acts which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.

Textual Amendments

F47 Words in s. 11 heading substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(8)(a)(24); S.I. 2016/1161, regs. 2, 3

F48 Word in s. 11(1) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(8)(b)(24); S.I. 2016/1161, regs. 2, 3

F49 Words in s. 11(2) omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 4

[F50 11A Income charged at the [F51 Scottish] rates U.K.

[F52 (1A) Income tax is charged at Scottish rates on the non-savings income of a Scottish taxpayer.]

(4) For the purposes of this section, “non-savings income” means income which is not savings income.

(5) This section is subject to—

• section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and

• any provisions of the Income Tax Acts (apart from section 10) which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(6) Section 16 has effect for determining [F53 which part of a Scottish taxpayer's income consists of savings income].]

Textual Amendments

F50 S. 11A inserted (with effect in accordance with Sch. 38 para. 12 of the amending Act) by Finance Act 2014 (c. 26), Sch. 38 para. 5

F51 Word in s. 11A heading substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(4)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F52 S. 11A(1A) substituted for s. 11A(1)-(3) (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(8)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F53 Words in s. 11A(6) substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(9)(15), 72(3); S.I. 2016/1161, regs. 2, 3

[F54 11C Income charged at the default basic, higher and additional rates: non-UK resident individuals U.K.

(1) Income tax on a non-UK resident individual's income up to the basic rate limit is charged at the default basic rate.

(2) Income tax is charged at the default higher rate on a non-UK resident individual's income above the basic rate limit and up to the higher rate limit.

(3) Income tax is charged at the default additional rate on a non-UK resident individual's income above the higher rate limit.

(4) Subsections (1) to (3) are subject to—

• section 11D (savings income charged at the savings basic, higher and additional rates),

• section 12 (savings income charged at the starting rate for savings),

• section 12A (savings income charged at the savings nil rate),

• section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and

• any other provisions of the Income Tax Acts (apart from section 10) which provide for income to be charged at different rates of income tax in some circumstances.

Textual Amendments

F54 Ss. 11C, 11D inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(8)(b)(24); S.I. 2016/1161, regs. 2, 3

11D Income charged at the savings basic, higher and additional rates U.K.

(1) Income tax is charged at the savings basic rate on an individual's income which—

(a) is saving income, and

(b) would otherwise be charged at the basic rate or the default basic rate.

(2) Income tax is charged at the savings higher rate on an individual's income which—

(a) is savings income, and

(b) would otherwise be charged at the higher rate or the default higher rate.

(3) Income tax is charged at the savings additional rate on an individual's income which—

(a) is savings income, and

(b) would otherwise be charged at the additional rate or the default additional rate.

(4) Subsections (1) to (3)—

(a) have effect after sections 12 and 12A have been applied (so that any reference in subsections (1) to (3) to income which would otherwise be charged at a particular rate does not include income charged at the starting rate for savings or at the savings nil rate), and

(b) are subject to any other provisions of the Income Tax Acts (apart from sections 10 and 11C) which provide for income to be charged at different rates of income tax in some circumstances.

(5) Section 16 has effect for determining the extent to which an individual's savings income above the starting rate limit for savings would otherwise be charged at the basic, higher or additional rate or the default basic, default higher or default additional rate.

(6) In relation to an individual who is a Scottish taxpayer, references in this section to income which would otherwise be charged at a particular rate are to be read as references to income that would, if the individual were not a Scottish taxpayer (but were UK resident), be charged at that rate (and subsection (5) is to be read accordingly).]

Textual Amendments

F54 Ss. 11C, 11D inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(8)(b)(24); S.I. 2016/1161, regs. 2, 3

[F55 12 Income charged at the starting rate for savings U.K.

(1) Income tax is charged at the starting rate for savings F56 ... on so much of an individual's income up to the starting rate limit for savings [F57 as—

(a) is savings income, and

(b) would otherwise be charged at the basic rate or the default basic rate].

(2) This is subject to any provisions of the Income Tax Acts (apart from section 10) which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(3) The starting rate limit for savings is [F58 £5000].

(4) See section 21 for indexation of the starting rate limit for savings.

(5) Section 16 has effect for determining the extent to which a person's income up to the starting rate limit for savings consists of savings income.]

Textual Amendments

F55 S. 12 substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 5

F56 Words in s. 12(1) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(10)(a)(24); S.I. 2016/1161, regs. 2, 3

F57 Words in s. 12(1) substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(10)(b)(24); S.I. 2016/1161, regs. 2, 3

F58 Word in s. 12(3) substituted (with effect in relation to the tax year 2017-18 and subsequent years) by Finance Act 2017 (c. 10), s. 4(1)(2)

[F59 12A Savings income charged at the savings nil rate U.K.

(1) This section applies in relation to an individual if—

(a) the amount of the individual's Step 3 income is greater than £L, where £L is the amount of the starting rate limit for savings, and

(b) when the individual's Step 3 income is split into two parts—

(i) one (“the individual's income up to the starting rate for savings”) consisting of the lowest £L of the individual's Step 3 income, and

(ii) the other (“the individual's income above the starting rate limit for savings”) consisting of the rest of the individual's Step 3 income,

some or all of the individual's income above the starting rate limit for savings consists of savings income (whether or not some or all of the individual's income up to the starting rate limit for savings consists of savings income).

(2) In this section—

• £A is the amount of the individual's savings allowance (see section 12B),

• “the excess” is so much of the individual's income above the starting rate limit for savings as consists of savings income, and

• £X is the amount of the excess.

(3) If £X is less than or equal to £A, income tax is charged at the savings nil rate (rather than the basic, higher or additional rate [F60 or the default basic, default higher or default additional rate] ) on the excess.

(4) If £X is more than £A, income tax is charged at the savings nil rate (rather than the basic, higher or additional rate [F61 or the default basic, default higher or default additional rate] ) on the lowest £A of the excess.

(5) Subsections (3) and (4) are subject to any provisions of the Income Tax Acts (apart from [F62 sections 10 and 11C]) which provide for income to be charged at different rates of income tax in some circumstances.

(6) Section 16 has effect for determining the extent to which the individual's income above the starting rate limit for savings consists of savings income.

(7) For the purposes of this section, an individual's “Step 3 income” is the individual's net income less allowances deducted at Step 3 of the calculation in section 23.

Textual Amendments

F59 Ss. 12A, 12B inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(5)(17)

F60 Words in s. 12A(3) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(11)(a)(24); S.I. 2016/1161, regs. 2, 3

F61 Words in s. 12A(4) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(11)(a)(24); S.I. 2016/1161, regs. 2, 3

F62 Words in s. 12A(5) substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(11)(b)(24); S.I. 2016/1161, regs. 2, 3

12B Individual's entitlement to a savings allowance U.K.

(1) Subsections (2) to (4) determine the amount of an individual's savings allowance for a tax year.

(2) If any of the individual's income for the year is additional-rate income, the individual's savings allowance for the year is nil.

(3) If—

(a) any of the individual's income for the year is higher-rate income, and

(b) none of the individual's income for the year is additional-rate income,

the individual's savings allowance for the year is £500.

(4) If none of the individual's income for the year is higher-rate income, the individual's savings allowance for the year is £1,000.

(5) The Treasury may by regulations substitute a different amount for the amount for the time being specified in subsection (2), (3) or (4); and regulations under this subsection that have effect for a tax year may be made at any time before the end of that tax year.

(6) If regulations under subsection (5) reduce any amount, the regulations may not be made unless a draft of the instrument containing them (whether alone or together with regulations under subsection (5) which increase any amount) has been laid before, and approved by a resolution of, the House of Commons.

(7) Section 1014(4) (negative procedure) does not apply to regulations under subsection (5) which increase any amount if—

(a) the instrument containing them also contains regulations under subsection (5) which reduce any amount, and

(b) a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

(8) For the purposes of this section—

(a) each of the following is “additional-rate income”—

(i) income on which income tax is charged at the additional rate [F63 , default additional rate] or dividend additional rate,

(ii) income on which income tax would be charged at the additional rate [F64 , or default additional rate,] but for section 12A (income charged at savings nil rate),

(iii) income on which income tax would be charged at the dividend additional rate but for section 13A (income charged at dividend nil rate), and

(iv) income of an individual who is a Scottish taxpayer or Welsh taxpayer which would, if the individual were not a Scottish taxpayer or Welsh taxpayer (as the case may be), be income on which income tax is charged at the additional rate [F65 or default additional rate], and

(b) each of the following is “higher-rate income”—

(i) income on which income tax is charged at the higher rate [F66 , default higher rate] or dividend upper rate,

(ii) income on which income tax would be charged at the higher rate [F67 , or default higher rate,] but for section 12A (income charged at savings nil rate),

(iii) income on which income tax would be charged at the dividend upper rate but for section 13A (income charged at dividend nil rate), and

(iv) income of an individual who is a Scottish taxpayer or Welsh taxpayer which would, if the individual were not a Scottish taxpayer or Welsh taxpayer (as the case may be), be income on which income tax is charged at the higher rate [F68 or default higher rate].]

Textual Amendments

F59 Ss. 12A, 12B inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(5)(17)

F63 Words in s. 12B(8)(a)(i) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(12)(a)(24); S.I. 2016/1161, regs. 2, 3

F64 Words in s. 12B(8)(a)(ii) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(12)(b)(24); S.I. 2016/1161, regs. 2, 3

F65 Words in s. 12B(8)(a)(iv) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(12)(c)(24); S.I. 2016/1161, regs. 2, 3

F66 Words in s. 12B(8)(b)(i) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(12)(d)(24); S.I. 2016/1161, regs. 2, 3

F67 Words in s. 12B(8)(b)(ii) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(12)(e)(24); S.I. 2016/1161, regs. 2, 3

F68 Words in s. 12B(8)(b)(iv) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(12)(f)(24); S.I. 2016/1161, regs. 2, 3

13 Income charged at the dividend ordinary[F69 , dividend upper and dividend additional] rates: individuals U.K.

(1) Income tax is charged at the dividend ordinary rate on an individual's income which—

(a) is dividend income,

(b) would otherwise be charged at the F70 ... basic rate, F71 ... and

(c) is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

(2) Income tax is charged at the dividend upper rate on an individual's income which—

(a) is dividend income, F72 ...

(b) would otherwise be charged at the higher rate, F73 ... [F74 and

(c) is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005.]

[F75 (2A) Income tax is charged at the dividend additional rate on an individual's income which—

(a) is dividend income,

(b) would otherwise be charged at the additional rate, F76 ... and

(c) is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005.]

(3) Subsections (1) [F77 to (2A)] are subject to any provisions of the Income Tax Acts (apart from section 10 [F78 or 11A]) which provide for income to be charged at different rates of income tax in some circumstances.

(4) Section 16 has effect for determining the extent to which an individual's dividend income would otherwise be charged at the F79 ... basic [F80 , higher or additional] rate F81 ....

[F82 (5) In relation to an individual who is a Scottish taxpayer, references in this section to income that would otherwise be charged at a particular rate are to be read as references to income that would, if the individual were not a Scottish taxpayer, be charged at that rate (and subsection (4) is to be read accordingly).]

Textual Amendments

F69 Words in s. 13 heading substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 5(5)

F70 Words in s. 13(1)(b) omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 6(a)

F71 Words in s. 13(1)(b) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(11)(a)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F72 Word in s. 13(2)(a) omitted (21.7.2008 with effect in accordance with s. 68(2) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 68(1)(a)

F73 Words in s. 13(2)(b) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(11)(b)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F74 S. 13(2)(c) and word inserted (21.7.2008 with effect in accordance with s. 68(2) of the amending Act) by Finance Act 2008 (c. 9), s. 68(1)(b)

F75 S. 13(2A) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 5(2)

F76 Words in s. 13(2A)(b) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(11)(c)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F77 Words in s. 13(3) substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 5(3)

F78 Words in s. 13(3) inserted (with effect in accordance with Sch. 38 para. 12 of the amending Act) by Finance Act 2014 (c. 26), Sch. 38 para. 6(d)

F79 Word in s. 13(4) omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 6(b)

F80 Words in s. 13(4) substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 5(4)

F81 Words in s. 13(4) omitted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(11)(d)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F82 S. 13(5) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(11)(e)(15), 72(3); S.I. 2016/1161, regs. 2, 3

[F83 13A Income charged at the dividend nil rate U.K.

(1) Subsection (2) applies if, ignoring this section, at least some of an individual's income would be charged to income tax at the dividend ordinary rate, the dividend upper rate or the dividend additional rate.

(2) Income tax is charged at the dividend nil rate (rather than the dividend ordinary rate, dividend upper rate or dividend additional rate) on one or more amounts of the individual's income as follows—

• Step 1 Identify the amount (“D”) of the individual's income which would, ignoring this section, be charged at the dividend ordinary rate.Rule 1A: If D is more than £5,000, the first £5,000 of D is charged at the dividend nil rate (rather than the dividend ordinary rate), and is the only amount charged at the dividend nil rate.Rule 1B: If D is equal to £5,000, D is charged at the dividend nil rate (rather than the dividend ordinary rate), and is the only amount charged at the dividend nil rate.Rule 1C: If D is less than £5,000 but more than nil, D is charged at the dividend nil rate (rather than the dividend ordinary rate).

• Step 2 If D is less than £5,000, identify the amount (“U”) of the individual's income which would, ignoring this section, be charged at the dividend upper rate.Rule 2A: If the total of D and U is more than £5,000—

  (a)

  the first £M of U is charged at the dividend nil rate (rather than the dividend upper rate), where £M is the difference between £5,000 and D, and

  (b)

  the amounts charged under this Rule and Rule 1C are the only amounts charged at the dividend nil rate.

  Rule 2B: If the total of D and U is equal to £5,000, U is charged at the dividend nil rate (rather than the dividend upper rate), and the amounts charged under this Rule and Rule 1C are the only amounts charged at the dividend nil rate.Rule 2C: If the total of D and U is less than £5,000 but more than nil, U is charged at the dividend nil rate (rather than the dividend upper rate).

• Step 3 If the total of D and U is less than £5,000, identify the amount (“A”) of the individual's income which would, ignoring this section, be charged at the dividend additional rate.Rule 3A: If the total of D, U and A is more than £5,000, the first £X of A is charged at the dividend nil rate (rather than the dividend additional rate), where £X is the difference between—

  • £5,000, and

  • the total of D and U,

  and the amounts charged under this Rule, and Rules 1C and 2C, are the amounts charged at the dividend nil rate.Rule 3B: If the total of D, U and A is less than or equal to £5,000, A is charged at the dividend nil rate (rather than the dividend additional rate), and the amounts charged under this Rule, and Rules 1C and 2C, are the amounts charged at the dividend nil rate.]

Textual Amendments

F83 S. 13A inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(5)(10)

14 Income charged at the dividend ordinary rate: other persons U.K.

(1) Income tax is charged at the dividend ordinary rate on the income of persons other than individuals which—

(a) is dividend income,

(b) would otherwise be charged at the basic rate, and

(c) is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

(2) This is subject to—

• Chapters 3 to 6 of Part 9 (which provide for some income of trustees to be charged at the dividend trust rate or at the trust rate),

• F84 ... and

• any other provisions of the Income Tax Acts (apart from section 11) which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.

Textual Amendments

F84 Words in s. 14(2) omitted (6.4.2014) by virtue of The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 37(3) (with reg. 32)

15 Income charged at the trust rate and the dividend trust rate U.K.

For the circumstances in which income tax is charged at the trust rate and the dividend trust rate, see Chapters 3 to 6 of Part 9.

16 Savings and dividend income to be treated as highest part of total income U.K.

(1) This section has effect for determining[F85 —

[F86 (za) which part of a Scottish taxpayer's income consists of savings income,]

(a) the extent to which a person's income up to the starting rate limit for savings consists of savings income,

[F87 (aa) the extent to which a person's income above the starting rate limit for savings consists of savings income,]

[F88 (ab) the rate at which income tax would be charged on a person's savings income above the starting rate limit for savings apart from sections 11D and 12A,] and

(b) the rate at which income tax would be charged on a person's dividend income apart from section 13.]

(2) It also has effect for all other income tax purposes except for the purposes of—

(a) section 491 (special rates not to apply to first slice of trustees' trust rate income), and

(b) sections 535 to 537 of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief).

(3) If a person has savings income but no dividend income, the savings income is treated as the highest part of the person's total income.

(4) If a person has dividend income but no savings income, the dividend income is treated as the highest part of the person's total income.

(5) If a person has both savings income and dividend income—

(a) the savings income and dividend income are together treated as the highest part of the person's total income, and

(b) the dividend income is treated as the higher part of that part of the person's total income.

(6) See section 1012 for the relationship between—

(a) the rules in this section, and

(b) other rules requiring particular income to be treated as the highest part of a person's total income.

(7) References in this section to dividend income do not include dividend income which is relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

Textual Amendments

F85 Words in s. 16(1) substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 7

F86 S. 16(1)(za) substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Scotland Act 2016 (c. 11), ss. 13(10), 14(12)(15), 72(3); S.I. 2016/1161, regs. 2, 3

F87 S. 16(1)(aa) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(6)(17)

F88 S. 16(1)(ab) inserted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(13)(24); S.I. 2016/1161, regs. 2, 3

17 Repayment: tax paid at [F89 greater] rate instead of [F90 starting rate for savings] [F91 or savings nil rate] U.K.

(1) This section applies if income tax [F92 at a rate greater than the starting rate for savings] has been paid on income on which income tax is chargeable at the [F93 starting rate for savings].

[F94 (1A) This section also applies if income tax at a rate greater than the savings nil rate has been paid on income on which income tax is chargeable at the savings nil rate.]

(2) If a claim is made, any necessary repayment of tax must be made.

Textual Amendments

F89 Word in s. 17 heading substituted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(7)(b)(i)(17)

F90 Words in s. 17 heading substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 8(3)

F91 Words in s. 17 heading inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(7)(b)(ii)(17)

F92 S. 17(1) words substituted (30.11.2016 with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(14)(24); S.I. 2016/1161, regs. 2, 3

F93 Words in s. 17(1) substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 8(2)

F94 S. 17(1A) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(7)(a)(17)

18 Meaning of “savings income” U.K.

(1) This section applies for the purposes of the Income Tax Acts.

(2) “Savings income” is income—

(a) which is within subsection (3) or (4), and

(b) which is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

(3) Income is within this subsection if it is—

(a) income chargeable under Chapter 2 of Part 4 of ITTOIA 2005 (interest),

(b) income chargeable under Chapter 7 of Part 4 of ITTOIA 2005 (purchased life annuity payments), other than income from annuities specified in section 718(2) of that Act (annuities purchased from certain life assurance premium payments or under wills etc),

(c) income chargeable under Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities), or

(d) income chargeable under Chapter 2 of Part 12 of this Act (accrued income profits).

(4) Income is within this subsection if—

(a) it is chargeable under Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc), and

(b) an individual is, or personal representatives are, liable for income tax on it (under section 465 or 466 of that Act).

Modifications etc. (not altering text)

C1 S. 18 excluded by Taxes Management Act 1970 (c. 9), s. 18E(2)(b) (as inserted (with effect in accordance with s. 381(1)) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 7 para. 103 (with Sch. 9 paras. 1-9, 22))

19 Meaning of “dividend income” U.K.

(1) This section applies for the purposes of the Income Tax Acts.

(2) “Dividend income” is income which is—

(a) chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc from UK resident companies),

(b) chargeable under Chapter 4 of that Part (dividends from non-UK resident companies),

(c) chargeable under Chapter 5 of that Part (stock dividends from UK resident companies),

(d) chargeable under Chapter 6 of that Part (release of loan to participator in close company), or

(e) a relevant foreign distribution chargeable under Chapter 8 of Part 5 of ITTOIA 2005 (income not otherwise charged).

(3) In subsection (2) “relevant foreign distribution” means a distribution of a non-UK resident company which—

(a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but

(b) would be chargeable under Chapter 3 of that Part if the company were UK resident.

Starting rate limit and basic rate limit U.K.

F95 20 The starting rate limit and the basic rate limit U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F95 S. 20 omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 10

21 Indexation of the [F96 basic rate limit and starting rate limit for savings] U.K.

(1) This section applies if the [F97 consumer prices index] for the September before the start of a tax year is higher than it was for the previous September.

F98 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The basic rate limit for the tax year is the amount found as follows.

Step 1

Increase the basic rate limit for the previous tax year by the same percentage as the percentage increase in the [F99 consumer prices index].

Step 2

If the result of Step 1 is a multiple of £100, it is the basic rate limit for the tax year.

If the result of Step 1 is not a multiple of £100, round it up to the nearest amount which is a multiple of £100.

That amount is the basic rate limit for the tax year.

[F100 (3A) The starting rate limit for savings for the tax year is the amount found as follows.

Step 1

Increase the starting rate limit for savings for the previous tax year by the same percentage as the percentage increase in the [F101 consumer prices index].

Step 2

If the result of Step 1 is a multiple of £10, it is the starting rate limit for savings for the tax year.

If the result of Step 1 is not a multiple of £10, round it up to the nearest amount which is a multiple of £10.

That amount is the starting rate limit for savings for the tax year.]

(4) Subsections [F102 (3) and (3A)] do not require a change to be made in the amounts deductible or repayable under PAYE regulations during the period beginning on 6 April and ending on 17 May in the tax year.

(5) Before the start of the tax year the Treasury must make an order replacing the amounts specified in [F103 sections 10 and 12] with the amounts which, as a result of subsections [F104 (3) and (3A)], are the [F105 basic rate limit and starting rate limit for savings] for the tax year.

[F106 (6) In this section “consumer prices index” means the all items consumer prices index published by the Statistics Board.]

Textual Amendments

F96 Words in s. 21 heading substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 1 para. 11(6)

F97 Words in s. 21(1) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(2)(a)

F98 S. 21(2) omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 11(2)

F99 Words in s. 21(3) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(2)(a)

F100 S. 21(3A) inserted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 1 para. 11(3)

F101 Words in s. 21(3A) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(2)(a)

F102 Words in s. 21(4) substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 1 para. 11(4)

F103 Words in s. 21(5) substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 1 para. 11(5)(a)

F104 Words in s. 21(5) substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 1 para. 11(5)(b)

F105 Words in s. 21(5) substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 1 para. 11(5)(c)

F106 S. 21(6) inserted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(2)(b)

Modifications etc. (not altering text)

C2 S. 21 excluded (21.7.2009) by Finance Act 2009 (c. 10), s. 2(2)

C3 S. 21 excluded (19.7.2011) by Finance Act 2011 (c. 11), s. 2(2)

C4 S. 21 excluded (17.7.2012) by Finance Act 2012 (c. 14), s. 2(2)

C5 S. 21 excluded (17.7.2013) by Finance Act 2013 (c. 29), s. 3(2)

C6 S. 21 excluded (17.7.2014) by Finance Act 2014 (c. 26), ss. 1(4)(a), 2(2)(a)

C7 S. 21 excluded (temp.) (17.7.2014) by Finance Act 2014 (c. 26), s. 3(3)

C8 S. 21 excluded (26.3.2015) by Finance Act 2015 (c. 11), s. 4(2)

C9 S. 21 excluded (6.4.2015 for the tax year 2015-16) by Finance Act 2014 (c. 26), s. 2(2)(a)

C10 S. 21 excluded (temp.) (27.4.2017 in relation to the tax year 2017-18) by Finance Act 2017 (c. 10), s. 4(3)