The Income Tax (Indexation) (No.2) Order 2003

Explanatory Note

(This note is not part of the Order)

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 2004 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 2004-5.

The relevant amounts for the purposes of sections 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 2003-4 by the Income Tax (Indexation) (No.2) Order 2002 (S.I. 2002/2930). As far as sections 257(1), (2) and (3) were concerned, those amounts were specified in sections 28 and 29 of the Finance Act 2002 for 2003-04.

For 2004-05, the amounts in section 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 2003 over that for September 2002. 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 257(C)(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 2002 is 177.6 and for September 2003 is 182.5.