OpenLegislation

The Income Tax (Indexation) Order 1988

S.I. 1988/503 · Made 15 March 1988

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

INCOME TAX

Made 15th March 1988

The Treasury, in pursuance of section 24(9) of the Finance Act 1980f1, hereby make the following Order:

Annotations to the whole text

Footnotes

f1

1980 c. 48.

Contents

  1. 1Article 1
  2. 2Article 2
  3. Signature
  4. Explanatory note

1

This Order may be cited as the Income Tax (Indexation) Order 1988.

2

(1)

The amounts which, unless Parliament otherwise determines, will be treated by virtue of section 24(4) and (5) of the Finance Act 1980f1 as specified for the year 1988—89 in section 32 of the Finance Act 1971f2 and section 8 of the Income and Corporation Taxes Act 1970f3 are set out in paragraphs (2) and (3).

(2)

In section 32 of the Finance Act 1971f4 (basic rate limit and higher rate bands)—

(a)

the basic rate limit — £18,600, and

(b)

the higher rate bands—

BandPart of total income in excess of basic rate limit
FirstThe first £2,600
SecondThe next £5,200
ThirdThe next £8,200
FourthThe next £8,200
FifthThe remainder.
(3)

In section 8 of the Income and Corporation Taxes Act 1970f5 (personal allowances) in—

(a)

subsection (1)(a)—

(i)

(married) — £3,945,

(ii)

(married — eighty or upwards) — £5,025;

(b)

subsection (1)(b)—

(i)

(single) — £2,515,

(ii)

(single — eighty or upwards) — £3,190;

(c)

subsection (1A)(a) (married — sixty-five or upwards) — £4,855;

(d)

subsection (1A)(b) (single — sixty-five or upwards) — £3,070;

(e)

subsection (1B) (income limit for the purposes of sub-paragraphs (a)(ii), (b)(ii), (c) and (d)) — £10,200;

(f)

subsection (2) (earned income of wife) — £2,515.

Signature

Tony Durant

David Lightbown

Two of the Lords Commissioners of Her Majesty’s Treasury

15th March 1988

Explanatory note

(This note is not part of the Order)

Section 24(4) and (5) of the Finance Act 1980 provide that the Treasury shall by order made by statutory instrument before 6th April 1988 specify the amounts which by virtue of that section shall, unless Parliament otherwise determines, be treated as specified for the year 1988—89. These are the thresholds for the higher rates of tax — the basic rate limit and the higher rate bands (section 32, Finance Act 1971), and the personal allowances (section 8, Income and Corporation Taxes Act 1970) respectively. These amounts are increased in accordance with the percentage increase (3.7%) in the retail prices index for December 1987 over that for December 1986. Certain of the amounts have been rounded to the nearest £100 in accordance with section 24(4) and (5)(a) and, in the case of the other amounts, the increases have been rounded to the nearest £10 in accordance with section 24(5)(b).

The “retail prices index” is defined in section 24(8) as the “general index of retail prices (for all items) published by the Department of Employment”. The retail prices index for December 1986 is 393.0 (based on January 1974 as 100) and for December 1987 103.3 (based on January 1987 as 100). (Table 6.4 on pages S56 and S57 of the February 1988 number of the Employment Gazette, the official journal of the Department of Employment. The retail prices index for January 1987 is 394.5 (based on January 1974 as 100) and the percentage increase is calculated thus:

103.3×394.5393)-100.)

This Order specifies amounts which take account of the percentage increase.