Income and Corporation Taxes Act 1988

Income tax U.K.

1 The charge to income tax. U.K.

[F1 (1) Income tax is charged in accordance with the Income Tax Acts on—

(a) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) all amounts which are charged to tax under any of the following provisions of ITEPA 2003—

(i) Part 2 (employment income),

(ii) Part 9 (pension income), and

(iii) Part 10 (social security income), F3 . . .

[F4 (ba) all amounts which are charged to tax under any of the following provisions of ITTOIA 2005—

(i) Part 2 (trading income),

(ii) Part 3 (property income),

(iii) Part 4 (savings and investment income), and

(iv) Part 5 (miscellaneous income), and]

(c) any other amounts which, under the Income Tax Acts, are charged to income tax.]

(2) M1 Where any Act enacts that income tax shall be charged for any year, income tax shall be charged for that year—

[F5 (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 [F6 paragraph (aa) above or] paragraph (b) below, at such rate as Parliament may determine to be the basic rate for that year;

[F7 (b) in respect of so much of an individual’s total income as exceeds [F8 £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.

[F9 (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) M2 The amount up to which an individual’s income is by virtue of subsection (2) above chargeable for any year at the [F10 [F11 starting 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 bandsF12 .

(4) M3 If the retail prices index for the month of [F13 September] preceding a year of assessment is higher than it was for the previous [F13 September], then, unless Parliament otherwise determines, subsection (2) above shall apply for that year as if for [F14 each 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 [F15 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.]

.

[F16 (5A) Subsection (4) above shall not require any change to be made in the amounts deductible or repayable under [F17 PAYE regulations] during the period beginning with 6th April and ending with 17th May in the year of assessment.]

F18 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) The Treasury shall before each year of assessment make an order specifying the [F19 amounts] which by virtue of subsection (4) above will be treated as specified for that year in subsection (2) above.

[F20 (6A) Where income tax at the basic rate has been borne on income chargeable at the [F21 starting 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

F1 S. 1(1) substituted (6.4.2003 with effect in accordance with s. 723(1) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 2(2) (with Sch. 7)

F2 S. 1(1)(a) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 2(a), Sch. 3 (with Sch. 2)

F3 Word at the end of s. 1(1)(b) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 2(b), Sch. 3 (with Sch. 2)

F4 S. 1(1)(ba) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 2(b) (with Sch. 2)

F5 S. 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)

F6 Words 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).

F7 1988(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;”.

F8 1990 s.17(1)(b)for 1990-91. (Art. 2(2)of S.I. 1990 No.677 (in Part III Vol.5)was not operated.)

F9 S. 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)

F10 Words 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).

F11 Words 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)

F12 Repealed by 1988(F) s. 148 and Sch. 14 Part IV for 1988-89 and subsequent years

F13 Words 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)

F14 Words 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).

F15 Words 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)

F16 S. 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)

F17 Words in s. 1(5A) substituted (6.4.2003 with effect in accordance with s. 723(1) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 2(3) (with Sch. 7)

F18 S. 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

F19 Word 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).

F20 S. 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).

F21 Words 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.

C2 S. 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.

C6 S. 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)

C7 S. 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

M1 Source—1970 s.1; 1971 s.32(1); 1980 s.24(2); 1987 s.20(1)

M2 Source‐1980 s.24(3); 1984 Sch.7 3(5)

M3 Source—1980 s.24(4), (7), (9)

[F22 1A Application of lower rate to income from savings and distributions. U.K.

(1) Subject to sections 469(2) [F23 , 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

[F24 (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 [F25 rate 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).

[F26 (1AA) In subsection (1)(b)(i) above “savings income” means income to which this section applies other than—

(a) income chargeable under [F27 Chapter 3, 5 or 6 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc., stock dividends from UK resident companies and loans to participators)], or

[F28 (b) dividends chargeable under Chapter 4 of Part 4 of that Act (dividends from non-UK resident companies) or relevant foreign distributions chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged).]]

[F29 (1A) The rate applicable in accordance with this subsection is—

(a) in the case of income chargeable under [F30 Chapter 3, 5 or 6 of Part 4 of ITTOIA 2005], the [F31 dividend] ordinary rate;

[F32 (b) in the case of dividends chargeable under Chapter 4 of Part 4 of that Act or relevant foreign distributions chargeable under Chapter 8 of Part 5 of that Act, the dividend ordinary rate; and]

(c) in the case of any other income, the lower rate.]

[F33 (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 [F34 (other than relevant foreign income) chargeable under—

(i) Chapter 2 of Part 4 of ITTOIA 2005 (charge on interest);

(ii) Chapter 7 of that Part of that Act (charge on purchased life annuity payments) other than income from annuities specified in section 718(2) of that Act; or

(iii) Chapter 8 of that Part of that Act (charge on profits from deeply discounted securities);]

[F35 (aa) any amount chargeable to tax F36 . . . by virtue of section 714, 716 or 723;]

(b) any income chargeable under [F37 Chapter 3, 5 or 6 of Part 4 of ITTOIA 2005]; F38 . . .

(c) subject to subsection (4) below, any [F39 income falling within subsection (3) below][F40 ; and

(d) any amount included in an individual’s total income by virtue of section [F41 465 of ITTOIA 2005 (gains from contracts for life insurance etc.)].]

[F42 (3) The income which falls within this subsection is any relevant foreign income which—

(a) would fall within subsection (2)(a) but for the exclusion of relevant foreign income;

(b) is a dividend chargeable under Chapter 4 of Part 4 of ITTOIA 2005; or

(c) is a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act.]

(4) This section does not apply to—

(a) any [F43 relevant foreign income which is charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis)]; F44 . . .

F44 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F45 (5) For the purposes of subsection (1)(b) above and any other provisions of the Income Tax Acts [F46 (other than [F47 sections 535 to 537 of ITTOIA 2005])]—

(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 [F48 Chapter 3, 5 or 6 of Part 4 of ITTOIA 2005] (if any), and

[F49 (ii) dividends chargeable under Chapter 4 of Part 4 of that Act (if any) or relevant foreign distributions chargeable under Chapter 8 of Part 5 of that Act (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 [F50 sections 535 to 537 of ITTOIA 2005]) as the highest part of a person’s income.

[F51 (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) F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F53 (8) In this section “relevant foreign distribution” means any distribution of a company not resident in the United Kingdom which—

(a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but

(b) would be chargeable under Chapter 3 of that Part of that Act if the company were resident in the United Kingdom.

(9) And, for the meaning of “relevant foreign income”, see section 832(1).]]

Textual Amendments

F22 S. 1A inserted (with effect in accordance with s. 73(3) of the amending Act) by Finance Act 1996 (c. 8), s. 73(1)

F23 Words 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)

F24 Words 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)

F25 Words 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)

F26 S. 1A(1AA) inserted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2000 (c. 17), s. 32(3)

F27 Words in s. 1A(1AA)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(2)(a) (with Sch. 2)

F28 S. 1A(1AA)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(2)(b) (with Sch. 2)

F29 S. 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)

F30 Words in s. 1A(1A)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(3)(a)(i) (with Sch. 2)

F31 Word in s. 1A(1A)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(3)(a)(ii) (with Sch. 2)

F32 S. 1A(1A)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(3)(b) (with Sch. 2)

F33 S. 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)

F34 Words in s. 1A(2)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(4)(a) (with Sch. 2)

F35 S. 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)

F36 Words in s. 1A(2)(aa) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(4)(b), Sch. 3 (with Sch. 2)

F37 Words in s. 1A(2)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(4)(c) (with Sch. 2)

F38 Word preceding s. 1A(2)(c) repealed (with effect in accordance with s. 173(2) of the repealing Act) by Finance Act 2003 (c. 14), Sch. 35 para. 1(2), Sch. 43 Pt. 3(13), Note 1

F39 Words in s. 1A(2)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(4)(d), Sch. 2

F40 S. 1A(2)(d) and preceding word inserted (with effect in accordance with s. 173(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 35 para. 1(2)

F41 Words in s. 1A(2)(d) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(4)(e) (with Sch. 2)

F42 S. 1A(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(5) (with Sch. 2)

F43 Words in s. 1A(4)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(6)(a) (with Sch. 2)

F44 S. 1A(4)(b) and preceding word repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(6)(b), Sch. 3 (with Sch. 2)

F45 S. 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)

F46 Words in s. 1A(5) inserted (with effect in accordance with s. 173(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 35 para. 1(3)

F47 Words in s. 1A(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(7)(a) (with Sch. 2)

F48 Words in s. 1A(5)(b)(i) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch 1 para. 3(7)(b) (with Sch. 2)

F49 S. 1A(5)(b)(ii) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(7)(c) (with Sch. 2)

F50 Words in s. 1A(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(8) (with Sch. 2)

F51 S. 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)

F52 S. 1A(7) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 3(9), Sch. 3 (with Sch. 2)

F53 S. 1A(8)(9) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 4), Sch. 1 para. 3(10) (with Sch. 2)

Modifications etc. (not altering text)

C9 S. 1A extended (27.7.1999) Commonwealth Development Corporation Act 1999 (c. 20), s. 20, Sch. 3 para. 6(4) (with Sch. 3 para. 1)

[F55 1B Rates of tax applicable to [F54 distribution] income etc. U.K.

(1) In the case of so much of an individual’s income which consists of—

[F56 (a) income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.) (if any), and

(b) dividends chargeable under Chapter 4 of Part 4 of that Act (dividends from non-UK resident companies) (if any) or relevant foreign distributions chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged) (if any),]

as is income falling within section 1(2)(b), income tax shall, by virtue of this subsection, be charged at the [F57 dividend] 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 [F58 dividend] ordinary rate is 10 per cent., and

(b) the [F58 dividend] upper rate is 32.5 per cent.,

or, in either case, such other rate as Parliament may determine.

[F59 (3) In this section “relevant foreign distribution” has the same meaning as in section 1A (see subsection (8) of that section).]]

Textual Amendments

F54 Words in s. 1B sidenote substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 4(5) (with Sch. 2)

F55 S. 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)

F56 S. 1B(1)(a)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 4(2)(a) (with Sch. 2)

F57 Word in s. 1B(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 4(2)(b) (with Sch. 2)

F58 Words in s. 1B(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 4(3) (with Sch. 2)

F59 S. 1B(3) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 4(4) (with Sch. 2)

2 Fractions of a pound, and yearly assessments. U.K.

(1) M4 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

M4 Source—1970 s.2

3 Certain income charged at basic rate. U.K.

M5 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; F60 . . .

(c) F60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

F60 S. 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

M5 Source—1970 s.3; 1971 Sch.6 2

4 Construction of references in Income Tax Acts to deduction of tax. U.K.

(1) M6 Any provision of the Income Tax Acts requiring, permitting or assuming the deduction of income tax from any amount (otherwise than [F61 under PAYE regulations]) 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.

[F62 (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.]

[F63 (1B) F64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(2) For the purposes of [F65 this 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

F61 Words in s. 4(1) substituted (6.4.2003 with effect in accordance with s. 723(1) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 3 (with Sch. 7)

F62 S. 4(1A) inserted (with effect in accordance with s. 73(3) of the amending Act) by Finance Act 1996 (c. 8), s. 73(2)

F63 S. 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)

F64 S. 4(1B) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para 5, Sch. 3 (with Sch. 2)

F65 Words 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

M6 Source—1971 s.36; 1975(No. 2) s.44(6)

5 Date for payment. U.K.

F66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F66 S. 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