The Income Tax (Indexation) Order 1993

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 1993 specify the amounts which by virtue of those sections shall, unless Parliament otherwise determines, be treated as specified for the year 1993—94. These are the basic rate and lower rate limits (section 1 of the Act) and the personal and married couple’s allowances (sections 257 and 257A of the Act respectively).

This Order specifies the relevant amounts for the 1993—94 year of assessment.

For the year 1992—93, the amount of the basic rate limit in section 1 of the Act was fixed by section 10(2) of the Finance Act 1992; the amount of the lower rate limit was fixedby section 9(2) of the 1992 Act; and the amount of the married couple’s allowance insection 257A(1) of the Act was fixed by section 10(3) of the 1992 Act.

The amounts of personal and married couple’s allowances in sections 257 and 257A of the Act (as substituted by section 33 of the Finance Act 1988) were specified in the Income Tax (Indexation) Order 1992 (S.I. 1992/622).

Those amounts are increased by this Order in accordance with the percentage increase in the retail prices index for December 1992 over that for December 1991. Certain of the amounts have been rounded up to the nearest £100 in accordance with sections 1(4) and 257C(1)(a) of the Act and, in the case of the other amounts, the increases have been rounded up to the nearest £10 in accordance with section 257C(1)(b) of the Act.

The “retail prices index” is defined in section 833(2) of the Act, as amended by paragraph 5 of Schedule 2 to the Transfer of Functions (Economic Statistics) Order 1989 (S.I. 1989/992), as the “general index of retail prices (for all items) published by the Central Statistical Office of the Chancellor of the Exchequer”. The retail prices index for December 1991 is 135.7 and for December 1992 139.2 (based on January 1987 as 100) (see Table 6.1 on page S58 of the February 1993 number of the Employment Gazette, the official journal of the Department of Employment).