(1)M1 Income tax shall be charged in accordance with the provisions of the Income Tax Acts in respect of all property, profits or gains respectively described or comprised in the [F1Schedules A, D, E and F], set out in sections 15 to 20 or which in accordance with the Income Tax Acts are to be brought into charge to tax under any of those Schedules or otherwise.
(2)M2 Where any Act enacts that income tax shall be charged for any year, income tax shall be charged for that year—
[F2(aa)in respect of so much of an individual’s total income as does not exceed £1,500, at such rate as Parliament may determine to be the starting rate for that year;]
(a)in respect of any income which does not fall within [F3paragraph (aa) above or] paragraph (b) below, at such rate as Parliament may determine to be the basic rate for that year;
[F4(b)in respect of so much of an individual’s total income as exceeds [F5£20,700] at such higher rate as Parliament may determine]
but this subsection has effect subject to any provision of the Income Tax Acts providing for income tax to be charged at a different rate in certain cases.
[F6(2A)The amount up to which an individual’s income is by virtue of subsection (2) above chargeable for any year at the starting rate shall be known as the starting rate limit.]
(3)M3 The amount up to which an individual’s income is by virtue of subsection (2) above chargeable for any year at the [F7[F8starting rate] or the] basic rate shall be known as the basic rate limit,and the parts of income in excess of the basic rate limit which are specified in paragraph (b) of that subsection shall be known respectively as the first, second, third, fourth and fifth higher rate bandsF9.
(4)M4 If the retail prices index for the month of [F10September] preceding a year of assessment is higher than it was for the previous [F10September], then, unless Parliament otherwise determines, subsection (2) above shall apply for that year as if for [F11each of the amounts specified] in that subsection as it applied for the previous year (whether by virtue of this subsection or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index [F12 and—
(a)if the result in the case of the amount specified in subsection (2)(aa) above is not a multiple of £10, rounding it up to the nearest amount which is such a multiple, and
(b)if the result in the case of the amount specified in subsection (2)(b) above is not a multiple of £100, rounding it up to the nearest amount which is such a multiple.]
.
[F13(5A)Subsection (4) above shall not require any change to be made in the amounts deductible or repayable under section 203 during the period beginning with 6th April and ending with 17th May in the year of assessment.]
F14(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)The Treasury shall before each year of assessment make an order specifying the [F15amounts] which by virtue of subsection (4) above will be treated as specified for that year in subsection (2) above.
[F16(6A)Where income tax at the basic rate has been borne on income chargeable at the [F17starting rate] any necessary repayment of tax shall be made on the making of a claim.]
(7)Part VII contains general provisions relating to the taxation of income of individuals.
Textual Amendments
F1Words in s. 1(1) substituted (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), s. 79, Sch. 7 para. 2 (with Sch. 7 para. 33-35)
F2S. 1(2)(aa) substituted (27.7.1999 with application for the year 1999-00 and subsequent years of assessment) by Finance Act 1999 (c. 16), s. 22(1)
F3Words in s. 1(2)(a) inserted (16.3.1992 with application for the year 1992-93 and subsequent years of assessment) by Finance Act 1992 (c. 20), s. 9(3)(10)(11).
F41988(F) s.24(2)(a)for 1988-89.Previously
“(b) in respect of so much of an individual's total income as exceeds £17,900, at such higher rates respectively as Parliament may determine in relation to the first £2,500, the next £5,000, the next £7,900, the next £7,900 and the remainder;”.
F51990 s.17(1)(b)for 1990-91. (Art. 2(2)of S.I. 1990 No.677 (in Part III Vol.5)was not operated.)
F6S. 1(2A) substituted (27.7.1999 with application for the year 1999-00 and subsequent years of assessment) by Finance Act 1999 (c. 16), s. 22(2)
F7Words in s. 1(3) inserted (16.3.1992 with application for the year 1992-93 and subsequent years of assessment) by Finance Act 1992 (c. 20), s. 9(5)(10)(11).
F8Words in s. 1(3) substituted (27.7.1999 with application for the year 1999-00 and subsequent years of assessment) by Finance Act 1999 (c. 16), s. 22(3)
F9Repealed by 1988(F) s. 148 and Sch. 14 Part IV for 1988-89 and subsequent years
F10Words in s. 1(4) substituted (27.7.1993 with effect for year 1994-95 and subsequent years of assessment) by 1993 c. 34, s. 107(2)(a)(8)
F11Words in s. 1(4) substituted (16.3.1992 with application for the year 1992-93 and subsequent years of assessment) by virtue of Finance Act 1992 (c. 20), s. 9(6)(10)(11).
F12Words in s. 1(4) substituted (27.7.1999 with application for the year 1999-00 and subsequent years of assessment) by Finance Act 1999 (c. 16), s. 22(4)
F13S. 1(5A) inserted (27.7.1999 with effect for the year 1999-00 and subsequent years of assessment) by Finance Act 1999 (c. 16), s. 25(2)
F14S. 1(5) repealed (27.7.1993 with effect for the year 1994-95 and subsequent years of assessment) by 1993 c. 34, ss. 107(2)(b)(8), 213, Sch. 23, Pt.III
F15Word in s. 1(6) substituted (16.3.1992 with application for the year 1992-93 and subsequent years of assessment) by virtue of Finance Act 1992 (c. 20), s. 9(7)(10)(11).
F16S. 1(6A) inserted (16.3.1992 with application for the year 1992-93 and subsequent years of assessment) by Finance Act 1992 (c. 20), s. 9(8)(10)(11).
F17Words in s. 1(6A) substituted (27.7.1999 with application for the year 1999-00 and subsequent years of assessment) by Finance Act 1999 (c. 16), s. 22(6)
Modifications etc. (not altering text)
C1 See s.686—income of trustees chargeable at higher rate.
C2S. 1(2) amended (1991-92) by S.I. 1991/732, art. 2(2)
S. 1(2) amended (1992-93) by 1992 c. 20, s. 10(2)(b) (in place of S.I. 1992/622, art. 2(2))
S. 1(2) amended (1993-94) by 1993 c. 34, s. 51(2) (in place of S.I. 1993/755, art. 2(2))
S. 1(2) amended (1994-95) by 1994 c. 9, s. 75(2) (in place of S.I. 1993/2948, art. 2(2))
S. 1(2)(b) amended (1995-96) by S.I. 1994/3012, art. 2(2)(b)
S. 1(2)(aa) amended (1995-96) by 1995 c. 4, s. 35(2) (in place of S.I. 1994/3012, art. 2(2)(a))
S. 1(2) amended (1996-97) by 1996 c. 8, s. 72(2) (in place of S.I. 1995/3031, art. 2(2))
S. 1(2)(b) amended (1997-98) by S.I. 1996/2952, art. 2(2)(b)
S. 1(2)(aa) amended (1997-98) by 1997 c. 16, s. 54(2) (in place of S.I. 1996/2952, art. 2(2)(a))
S. 1(2) amended (1998-99) by S.I. 1998/755, art. 2(2)
S. 1(2)(b) amended (1999-00) by S.I. 1999/597, art. 2(2)(b) (the effect of art. 2(2)(a) being superseded by 1999 c. 16, s. 22(1) which substitutes s. 1(2)(aa))
S. 1(2) amended (2000-01) by S.I. 2000/806, art. 2(2)
S. 1(2)(b) amended (2001-02) by S.I. 2001/638, art. 2(2)(b)
S. 1(2)(aa) amended (2001-02) by 2001 c. 9, s. 51(1) (in place of S.I. 2001/638, art. 2(2)(a))
S. 1(2) amended (2002-03) by S.I. 2002/707, art. 2(2)
S. 1(2) amended (2003-04) by S.I. 2003/840, art. 2
S. 1(2) amended (2004-05) by S.I. 2004/772, art. 2
S. 1(2) amended (2005-06) by S.I. 2005/716, art. 2
S. 1(2) amended (2006-07) by S.I. 2006/872, art. 2
S. 1(2) amended (2007-08) by S.I. 2007/943, art. 2
C3 See 1990 s.17(1)—basic rate 25%and higher rate 40%for 1990-91.
C4 For earlier years see Table C Vol.1.
C5 See—1988(F) s.24(2)—indexation not to apply for 1988-89.1990 s.17(1)—indexation not to apply for 1990-91.
C6S. 1(4) excluded for the year 1991-92 by Finance Act 1991 (c. 31, SIF 63:1), s. 21(2)
S. 1(4) excluded for the year 1992-93 by Finance Act 1992 (c. 20), s. 10(2)(a)(5).
S. 1(4) excluded for the year 1993-94 by Finance Act 1993 (c. 34), s. 51(2)
S. 1(4) excluded for the year 1994-95 by Finance Act 1994 (c. 9), s. 75(2)
S. 1(4) excluded for the year 1995-96 by Finance Act 1995 (c. 4), s. 35(2)
S. 1(4) excluded for the year 1996-97 by Finance Act 1996 (c. 8), s. 72(2)
S. 1(4) excluded for the year 1999-00 by Finance Act 1999 (c. 16), s. 22(5)
S. 1(4) excluded for the year 2001-02 by Finance Act 2001 (c. 9), s. 51(2)
C7S. 1(5A) modified for the year 2002-03 by Finance Act 2002 (c. 23), s. 27(a)
S. 1(5A) modified for the year 2003-04 by Finance Act 2003 (c. 14), s. 132
C8 See S.I. 1989 No. 467 in Part III Vol.5.
Marginal Citations
M1Source—1970 s.1
M2Source—1970 s.1; 1971 s.32(1); 1980 s.24(2); 1987 s.20(1)
M3Source‐1980 s.24(3); 1984 Sch.7 3(5)
M4Source—1980 s.24(4), (7), (9)
(1)Subject to sections 469(2) [F19, 686 and 720(5),] so much of any person’s total income for any year of assessment as—
(a)comprises income to which this section applies, and
(b)in the case of an individual, is not
[F20(i)savings income falling within section 1(2)(aa), or
(ii)] income falling within section 1(2)(b),
shall, by virtue of this section, be charged for that year at the [F21rate applicable in accordance with subsection (1A) below], instead of at the rate otherwise applicable to it in accordance with section 1(2)(aa) and (a).
[F22(1AA)In subsection (1)(b)(i) above “savings income” means income to which this section applies other than—
(a)income chargeable under Schedule F, or
(b)equivalent foreign income falling within subsection (3)(b) below and chargeable under Case V of Schedule D.]
[F23(1A)The rate applicable in accordance with this subsection is—
(a)in the case of income chargeable under Schedule F, the Schedule F ordinary rate;
(b)in the case of equivalent foreign income falling within subsection (3)(b) below and chargeable under Case V of Schedule D, the Schedule F ordinary rate; and
(c)in the case of any other income, the lower rate.]
[F24(1B)In relation to any year of assessment for which income tax is charged the lower rate is 20 per cent. or such other rate as Parliament may determine.]
(2)Subject to subsection (4) below, this section applies to the following income—
(a)any income chargeable under Case III of Schedule D other than—
(i)relevant annuities and other annual payments that are not interest; and
(ii)amounts so chargeable by virtue of section 119 F25. . . ;
[F26(aa)any amount chargeable to tax under Case VI of Schedule D by virtue of section 714, 716 or 723;]
(b)any income chargeable under Schedule F; and
(c)subject to subsection (4) below, any equivalent foreign income.
(3)The income which is equivalent foreign income for the purposes of this section is any income chargeable under Case IV or V of Schedule D which—
(a)is equivalent to a description of income falling within subsection (2)(a) above but arises from securities or other possessions out of the United Kingdom; or
(b)consists in any such dividend or other distribution of a company not resident in the United Kingdom as would be chargeable under Schedule F if the company were resident in the United Kingdom.
(4)This section does not apply to—
(a)any income chargeable to tax under Case IV or V of Schedule D which is such that section 65(5)(a) or (b) provides for the tax to be computed on the full amount of sums received in the United Kingdom; or
(b)any amounts deemed by virtue of section 695(4)(b) or 696(6) to be income chargeable under Case IV of Schedule D.
[F27(5)For the purposes of subsection (1)(b) above and any other provisions of the Income Tax Acts—
(a)so much of any person’s income as comprises income to which this section applies shall be treated as the highest part of his income; and
(b)so much of that part as consists of—
(i)income chargeable under Schedule F (if any), and
(ii)equivalent foreign income falling within subsection (3)(b) above and chargeable under Case V of Schedule D (if any),
shall be treated as the highest part of that part.]
(6)Subsection (5) above shall have effect subject to section 833(3) but shall otherwise have effect notwithstanding any provision requiring income of any description to be treated for the purposes of the Income Tax Acts (other than section 550) as the highest part of a person’s income.
[F28(6A)Where income tax at the basic rate has been borne on income chargeable at the lower rate any necessary repayment of tax shall be made on the making of a claim.]
(7)In this section “relevant annuity” means any annuity other than a purchased life annuity to which section 656 applies or to which that section would apply but for section 657(2)(a).]
Textual Amendments
F18S. 1A inserted (with effect in accordance with s. 73(3) of the amending Act) by Finance Act 1996 (c. 8), s. 73(1)
F19Words in s. 1A(1) substituted (with effect in accordance with s. 100(3) of the amending Act) by Finance Act 1998 (c. 36), s. 100(1)
F20Words in s. 1A(1)(b) inserted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2000 (c. 17), s. 32(2)
F21Words in s. 1A(1) substituted (with effect in accordance with s. 31(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 31(2)
F22S. 1A(1AA) inserted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2000 (c. 17), s. 32(3)
F23S. 1A(1A) inserted (with effect in accordance with s. 31(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 31(3)
F24S. 1A(1B) inserted (with application in accordance with s. 22(12) of the amending Act) by Finance Act 1999 (c. 16), s. 22(7)(a)
F25Words in s. 1A(2)(a)(ii) repealed (with effect in accordance with Sch. 18(2) Note in the amending Act) by Finance Act 1997 (c. 16), s. 113, Sch. 18(2)
F26S. 1A(2)(aa) inserted (with effect in accordance with s. 100(3) of the amending Act) by Finance Act 1998 (c. 36), s. 100(2)
F27S. 1A(5) substituted (with effect in accordance with s. 31(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 31(4)
F28S. 1A(6A) inserted (with application in accordance with s. 22(12) of the amending Act) by Finance Act 1999 (c. 16), s. 22(7)(b)
Modifications etc. (not altering text)
C9S. 1A extended (27.7.1999) Commonwealth Development Corporation Act 1999 (c. 20), s. 20, Sch. 3 para. 6(4) (with Sch. 3 para. 1)
(1)In the case of so much of an individual’s income which consists of—
(a)income chargeable under Schedule F (if any), and
(b)equivalent foreign income falling within section 1A(3)(b) and chargeable under Case V of Schedule D (if any),
as is income falling within section 1(2)(b), income tax shall, by virtue of this subsection, be charged at the Schedule F upper rate, instead of at the rate otherwise applicable to it in accordance with section 1(2)(b).
(2)In relation to any year of assessment for which income tax is charged—
(a)the Schedule F ordinary rate is 10 per cent., and
(b)the Schedule F upper rate is 32.5 per cent.,
or, in either case, such other rate as Parliament may determine.]
Textual Amendments
F29S. 1B inserted (with effect in accordance with s. 31(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 31(5)
(1)M5 The due proportion of income tax shall be charged for every fractional part of one pound.
(2)Every assessment and charge to income tax shall be made for a year commencing on the 6th April and ending on the following 5th April.
Marginal Citations
M5Source—1970 s.2
M6 Where a person is required to be assessed and charged with income tax in respect of any property, profits or gains out of which he makes any payment in respect of—
(a)any annuity or other annual payment (not being interest); or
(b)any royalty or other sum in respect of the user of a patent; F30. . .
(c)F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
he shall, in respect of so much of the property, profits or gains as is equal to the payment and may be deducted in computing his total income, be charged at the basic rate.
Textual Amendments
F30S. 3(c) and preceding word repealed (with effect in accordance with Sch. 18 Pt. 6(2) Note of the amending Act) by Finance Act 1997 (c. 16), s. 113 {Sch. 18}
Marginal Citations
M6Source—1970 s.3; 1971 Sch.6 2
(1)M7 Any provision of the Income Tax Acts requiring, permitting or assuming the deduction of income tax from any amount (otherwise than in pursuance of section 203) or treating income tax as having been deducted from or paid on any amount, shall, subject to any provision to the contrary, be construed as referring to deduction or payment of income tax at the basic rate in force for the relevant year of assessment.
[F31(1A)As respects deductions from, and tax treated as paid on, any such amounts as constitute or (but for the person whose income they are) would constitute income to which section 1A applies, subsection (1) above shall have effect with a reference to the lower rate in force for the relevant year of assessment substituted for the reference to the basic rate in force for that year.]
[F32(1B)To the extent that section 118E (paying and collecting agents: deduction of tax) applies in relation to foreign dividend income—
(a)subsections (1) and (1A) above shall not apply, and
(b)any provision of that section of the kind mentioned in subsection (1) above shall be construed as referring to deduction or payment of income tax at the Schedule F ordinary rate in force for the relevant year of assessment.
For this purpose “foreign dividend income” means any such dividend or other distribution of a company not resident in the United Kingdom as would be chargeable under Schedule F if the company were resident in the United Kingdom.]
(2)For the purposes of [F33this section], the relevant year of assessment shall be taken to be (except where otherwise provided)—
(a)if the amount is an amount payable wholly out of profits or gains brought into charge to tax, the year in which the amount becomes due;
(b)in any other case, the year in which the amount is paid.
Textual Amendments
F31S. 4(1A) inserted (with effect in accordance with s. 73(3) of the amending Act) by Finance Act 1996 (c. 8), s. 73(2)
F32S. 4(1B) inserted (retrospective, and with effect in accordance with s. 33(2) of the amending Act) by Finance Act 2000 (c. 17), s. 33(1)
F33Words in s. 4(2) substituted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 1996 (c. 8), s. 73, Sch. 6 para. 2
Marginal Citations
M7Source—1971 s.36; 1975(No. 2) s.44(6)
F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F34S. 5 repealed (with effect in accordance with s. 199(2) and Sch. 26 Pt. 5(23) Note 2 of the amending Act) by Finance Act 1994 (c. 9), s. 258, Sch. 26 Pt. 5(23); S.I. 1998/3173, art. 2