Explanatory note

For the tax year 2011–12 this Order replaces certain amounts specified in the Income Tax Act 2007 with new, increased amounts. In accordance with the method provided by sections 21 and 57, the increases are calculated by reference to the increase in the retail prices index. Where the retail prices index for the September before the start of the tax year is higher than it was for the previous September an order must be made replacing the amounts.

Increases made pursuant to section 21(5) are to the basic rate limit and the starting rate limit for savings. Increases made pursuant to section 57(6) are to personal allowances, married couple’s allowance, blind person’s allowance, the income limit for certain of the personal allowances, the married couple’s allowance (“the adjusted net income limit”) and the minimum amount of the married couple’s allowance (“the minimum amount”).

The basic rate limit and the personal allowance for those aged under 65 were last increased by the Finance Act 2009 (c. 10). The other amounts were last increased by the Income tax (Indexation) Order 2008 (S.I. 2008/3023). Section 1(3) of the Finance Act 2010 (c. 13) maintained all those rates for the tax year 2010–11. The retail prices index has increased and this Order sets out the new rates for the tax year 2011–12.

A full impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.