# The Income Tax (Indexation) Order 1995, Note: Explanatory note


(This note is not part of the Order)
Sections 1(6) and 257C(3) of the Income and Corporation Taxes Act 1988 (“the Act”) operate to provide that the Treasury shall by order made by statutory instrument before 6th April 1996 specify the amounts which by virtue of those sections shall, unless Parliament otherwise determines, be treated as specified for the year 1996 – 97. These are the lower rate and basic rate limits (section 1 of the Act) and the personal and married couple’s allowances (sections 257 and 257A of the Act respectively).
This Order specifies the relevant amounts for the 1996 – 97 year of assessment.
The amount of the lower rate limit was specified for the year 1995 – 96 by section 35(2) of the Finance Act 1995 (c. 4); and the amount of the basic rate limit was specified for that year by the Income Tax (Indexation) Order 1994 (S.I. 1994/3012) (“the 1994 Order”).
For the year 1995 – 96, the relevant amounts for the purposes of subsections (1) and (5) of section 257 of the Act were specified by the 1994 Order, and those for the purposes of subsections (2) and (3) of that section by section 36 of the Finance Act 1995.
The relevant amounts for the purposes of subsections (1), (2) and (3) of section 257A of the Act were specified, for the year 1994 – 95, by section 77(2) of the Finance Act 1994 (which amended those subsections) and, for the year 1995 – 96, by section 77(9) of the 1994 Act. The relevant amount for the purposes of subsection (5) of section 257A of the Act was specified, for the year 1995 – 96, by the 1994 Order.
Following the amendments to section 1(4) and 257C(1) of the Act made by section 107(1) to (3) of the Finance Act 1993, the amounts in sections 1, 257 and 257A of the Act are increased by this Order in accordance with the percentage increase in the retail prices index for September 1995 over that for September 1994. Certain of the amounts have been rounded up to the nearest £100 in accordance with sections 1(4) and 257C(1)(a) of the Act and, in the case of the other amounts, the increases have been rounded up to the nearest £10 in accordance with section 257C(1)(b) of the Act.
The “retail prices index”is defined in section 833(2) of the Act, as amended by paragraph 5 of Schedule 2 to the Transfer of Functions (Economic Statistics) Order 1989 (S.I. 1989/992), as the “general index of retail prices (for all items) published by the Central Statistical Office of the Chancellor of the Exchequer”. The retail prices index for September 1994 is 145.0 and for September 1995 150.6 (based on January 1987 as 100) (see Table 3.1 on page T26 of the October 1995 issue (No. 504) of Economic Trends, a publication of the Government Statistical Service).

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Source: https://www.legislation.gov.uk/uksi/1995/3031/note (the official version)
Page: https://openlegislation.uk/income-tax-indexation-order-1995/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.