Finance Act 2014

Income tax

1 Charge, rates, basic rate limit and personal allowance for 2014-15

(1) Income tax is charged for the tax year 2014-15.

(2) For that tax year—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

(c) the additional rate is 45%.

(3) For that tax year—

(a) the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “£31,865”, and

(b) the amount specified in section 35(1) of that Act (personal allowance for those born after 5 April 1948) is replaced with “£10,000”.

(4) Accordingly for that tax year—

(a) section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply, and

(b) section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply.

2 Basic rate limit for 2015-16 and personal allowances from 2015

(1) For the tax year 2015-16—

(a) the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “£31,785”, and

(b) the amount specified in section 35(1) (personal allowance) is replaced with “£10,500”.

(2) Accordingly, for that tax year—

(a) section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply, and

(b) section 57 (indexation of allowances), so far as relating to the amount specified in section 35(1), does not apply.

(3) In section 34(1)(a) of that Act (introduction), omit “, 36”.

(4) In section 35 of that Act (personal allowance for those born after 5 April 1948)—

(a) in subsection (1)(a), for “1948” substitute “1938”, and

(b) in the heading, for “1948” substitute “1938”.

(5) Omit section 36 of that Act (personal allowance for those born after 5 April 1938 but before 6 April 1948).

(6) In section 45(4)(b) of that Act (marriages before 5 December 2005), omit “36(2) or”.

(7) In section 46(4)(b) of that Act (marriages and civil partnerships on or after 5 December 2005), omit “36(2) or”.

(8) In section 57 of that Act (indexation of allowances)—

(a) in subsection (1)(a), for “1948” substitute “1938”, and

(b) in subsection (4) omit “36(2),”.

(9) The amendments made by subsections (3) to (8) have effect for the tax year 2015-16 and subsequent tax years.

3 The starting rate for savings and the savings rate limit

(1) In section 7 of ITA 2007 (the starting rate for savings) for “10%” substitute “0%”.

(2) For the tax year 2015-16 the amount specified in section 12(3) of that Act (starting rate limit for savings) is replaced with “£5,000”.

(3) Accordingly section 21 of that Act (indexation of limits), so far as relating to the starting rate limit for savings, does not apply for that tax year.

(4) In section 852 of that Act (power to make regulations disapplying duty to deduct sums representing income tax), in subsection (2)(a), after “made” insert “or is unlikely to be liable to pay any income tax on that person’s savings income for that tax year”.

(5) The amendments made by subsections (1) and (4) have effect for the tax year 2015-16 and subsequent tax years.

4 Indexation of limits and allowances under ITA 2007

(1) ITA 2007 is amended as follows.

(2) In section 21 (indexation of the basic rate limit and starting rate limit for savings)—

(a) in each of subsections (1), (3) and (3A), for “retail prices index” substitute “consumer prices index”, and

(b) after subsection (5) insert—

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

(3) In section 57 (indexation of allowances)—

(a) in each of subsections (2), (3) and (4), for “retail prices index” substitute “consumer prices index”, and

(b) after subsection (6) insert—

“(7) In this section “consumer prices index” means the all items consumer prices index published by the Statistics Board.”

(4) The amendments made by subsections (2) and (3) have effect for the tax year 2015-16 and subsequent tax years.