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CLAUSE 51: STARTING RATE LIMIT FOR 2001-02

SUMMARY

1.         This clause specifies the amount of the starting rate limit for 2001-02. It has been has been set at £1,880, which is an increase of £300 above statutory indexation.

DETAILS OF THE CLAUSE

2.         Sub-section (1) sets the starting rate limit, specified in section 1(2)(aa) Income and Corporation Taxes Acts 1988, to £1,880.

3.         Sub-section (2) disapplies statutory indexation, which would otherwise have increased the starting rate limit in line with the increase in the Retail Prices Index in the year to September 2000.

BACKGROUND NOTE

4.                  This clause increases the starting rate limit  to £1880, which is £300 above statutory indexation. This means that the first £1,880 of an individual’s taxable income (other than dividends) will be taxed at the starting rate which clause 50 sets at 10 per cent.

5.         Dividends are taxed at 10 per cent up to the basic rate limit and at 32.5 per cent above that limit.

6.         The starting rate band was introduced in 1999-2000 by Section 22 Finance Act 1999. It was extended by Section 32 Finance Act 2000 to cover income from savings, to take effect from 1999-2000.