# The Income Tax (Indexation) Order 1988

S.I. 1988/503 · made 15 March 1988

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).

Made under: Finance Act 1980

PDFs: Printed copy https://openlegislation.uk/income-tax-indexation-order-1988/pdf/uksi_19880503_en.pdf

## Introductory text

INCOME TAX
Made 15th March 1988
The Treasury, in pursuance of section 24(9) of the Finance Act 1980, hereby make the following Order:

## 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 1980 as specified for the year 1988—89 in section 32 of the Finance Act 1971 and section 8 of the Income and Corporation Taxes Act 1970 are set out in paragraphs (2) and (3).
(2) In section 32 of the Finance Act 1971 (basic rate limit and higher rate bands)—
(a) the basic rate limit — £18,600, and
(b) the higher rate bands—
Band
Part of total income in excess of basic rate limit
First
The first £2,600
Second
The next £5,200
Third
The next £8,200
Fourth
The next £8,200
Fifth
The remainder.
(3) In section 8 of the Income and Corporation Taxes Act 1970 (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.

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Source: https://www.legislation.gov.uk/uksi/1988/503 (the official version)
Page: https://openlegislation.uk/income-tax-indexation-order-1988
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.