The Income Tax (Indexation) (No.2) Order 2004

Made2nd December 2004

The Treasury, in exercise of the powers conferred upon them by section 257C(3) of the Income and Corporation Taxes Act 1988 1 make the following Order:

Citation1

This order may be cited as the Income Tax (Indexation) (No.2) Order 2004.

Amounts of personal allowance, married couple’s allowance and blind person’s allowance for 2005-62

1

The amounts, which, unless Parliament otherwise determines, will be treated by virtue of sections 257C(1) and 265(1A) of the Income and Corporation Taxes Act 1988 as specified for the year 2005-6 in sections 257, 257A2 and 2653 of that Act are set out in paragraphs (2) to (4) below.

2

In section 257 of that Act (personal allowance)—

a

in subsection (1) (personal allowance) — £4,895;

b

in subsection (2) (personal allowance — age 65-74) - £7,040;

c

in subsection (3) (personal allowance — age 75 and over) — £7,170;

d

in subsection (5) (income limit for age-related allowances) — £19,500.

3

In section 257A of that Act (married couple’s allowance)—

a

in subsection (2) (married couple’s allowance — age 70 to 74 and born before 6th April 1935 - £5,905;

b

in subsection (3) (married couple’s allowance — age 75 and over) — £5,975;

c

in subsection (5) (income limit for age-related married couple’s allowance) — £19,500;

d

in subsection (5A) (minimum married couple’s allowance) — £2,280.

4

In section 265(1) of that Act (blind person’s allowance) — £1,610.

Joan RyanNick AingerTwo of the Lords Commissioners of Her Majesty’s Treasury2nd December 2004

(This note is not part of the Regulations)

Section 257C(3) of the Income and Corporation Taxes Act 1988 (“the Act”) operates to provide that the Treasury shall by order made by statutory instrument before 6th April 2005 specify the amounts which by virtue of that section shall, unless Parliament otherwise determines, be treated as specified for the purposes of sections 257 (personal allowances), 257A (married couples allowances for those born before 6th April 1935) and 265 (blind person’s allowance) of the Act for the year of assessment 2005-06.

The relevant amounts for the purposes of sections 257(1),(2),(3) and (5) (Personal allowance), Section 257(5) (income limit for age-related personal allowances), section 257A (married couple’s allowances) and section 265(1) (blind person’s allowance) of the Act were specified for the year 2004-5 by the Income Tax (Indexation) (No.2) Order 2003 (S.I.2003/3215). The amounts in section 257(2) (personal allowance – age 65-74) and section 257(3) (personal allowance – age 75 and over) were subsequently increased by reference to the rise in earnings by section 24(1)(a) and (b)of the Finance Act 2004.

For 2005-06, the amounts in sections 257, 257A and 265(1) of the Act are increased by this Order in accordance with the percentage increase in the retail prices index for September 2004 over that for September 2003. Certain of the amounts have been rounded up to the nearest £100 in accordance with section 257C(1)(a) of the Act, and, in the case of 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 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 2003 is 182.5 and for September 2004 is 188.1.