The Income Tax (Indexation) Order 2003

Explanatory Note

(This note is not part of the Order)

Section 1(6) of the Income and Corporation Taxes Act 1988 (“the Act”) provides that the Treasury shall by order made by statutory instrument before each year of assessment specify the amounts which by virtue of that section shall, unless Parliament otherwise determines, be treated as specified for the purposes of section 1(2)(aa) (starting rate limit of charge to income tax), and section 1(2)(b) (basic rate limit of charge to income tax) of the Act for the year of assessment 2003-04.

These amounts were specified for the year 2002-03 by the Income Tax (Indexation) Order 2002 (S.I. 2002/707).

The amounts in section 1(2)(aa) and (b) are increased by this Order in accordance with the percentage increase in the retail prices index for September 2002 over that for September 2001. The amount in section 1(2)(aa) is rounded up to the nearest £10 in accordance with section 1(4)(a) of the Act, and the amount in section 1(2)(b) is rounded up to the nearest £100 in accordance with section 1(4)(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 2001 is 174.6 and for September 2002 is 177.6 (based on January 1987 as 100). The retail prices index for September 2002 was published in the November 2002 edition of Economic Trends, number 588, page T28, Table 3.1.