Finance Bill 2002: EXPLANATORY NOTE
CLAUSE 26: CHARGE AND RATES OF INCOME TAX FOR 2002-03
SUMMARY
1. This clause imposes the income tax charge for 2002-03, and sets the
starting, basic, and higher rates of tax at 10 per cent, 22 per cent, and 40 per cent, respectively. (REV1)
DETAILS OF CLAUSE
2. Clause 26 sets the rates of income tax for 2002-03.
3. Subsection (a) sets the starting rate of income tax at 10 per cent.
4. Subsection (b) sets the basic rate of income tax at 22 per cent.
5. Subsection (c) sets the higher rate of income tax at 40 per cent.
BACKGROUND
| 2001-02 | 2002-03 | |
| Starter rate (at 10 per cent) | £0-£1,880 |
£0-£1,920 |
| Basic rate (at 22 per cent) | £1,881-£29400 | £1,921-£29,900 |
| Higher rate (at 40 per cent) | Over £29,400 | Over £29,900 |
6. The rates of income tax must be re-imposed annually by Parliament (even if these were to be kept the same as in the previous year). The table below sets out the rates and income bands for 2001-02 and the proposed rates and bands for 2002-03.
7. The rate of tax on savings income over the starting rate limit but below the basic rate limit remains at the lower rate of 20 per cent. Dividends are taxed at 10 per cent up to the basic rate limit and at 32.5 per cent above that limit.