1. This clause imposes the income tax charge for 1999-00, and sets the starting, basic, and higher rates of tax at 10 per cent, 23 per cent, and 40 per cent, respectively.

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2. In 1998-99 there was a three rate structure of income tax. The lower rate was 20 per cent; the basic rate was 23 per cent; and the higher rate was 40 per cent. Income from savings (as defined in section 1A of the Income and Corporation Taxes Act (ICTA) 1988) was taxed at the lower rate up to the basic rate limit, and at the higher rate above that.

3. Clause 19 of this Bill introduces a new starting rate of taxon taxable income. In 1999-00 this starting rate will apply to taxable income up to £1,500. The basic and higher rates remain. This clause sets the starting, basic, and higher rates of income tax for the year..

4. The starting rate will not apply to income from savings (as defined in section 1A of ICTA 1988). The rates of tax on savings income remain at the lower rate of 20 per cent for income up to the basic rate limit and at 40 per cent above that, except for dividends which, from 6 April 1999, will be taxed at 10 per cent up to the basic rate limit and at 32.5 per cent above that limit.

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