Finance Bill 2002: EXPLANATORY NOTE
CLAUSE 27: INDEXED RATE BANDS FOR 2002-03: PAYE DEDUCTIONS ETC.
SUMMARY
1. This clause changes the date, on which statutory inflation-linked changes to the income tax rate bands, children's tax credit and blind person's allowance for a year of assessment must be made to PAYE deductions or repayments, to the first pay day on or after the 18 June for 2002-03.
DETAILS OF CLAUSE
2. Subsection (a) changes the date in section 1(5A) of ICTA 1988 where no change need be made to PAYE deductions and repayments from the 17 May to the 17 June, as a result of statutory indexation of the tax rate bands.
3. Subsection (b) performs the same changes with relation to section 257C (2A) of ICTA 1988. This, in turn, extends the date on which no change need be made from 17 May to 17 June for children's tax credit (section 257 AA(2)) and blind person's allowance (section 265).
BACKGROUND
4. Clause 27 changes the date on which employers and pension providers must have made indexation based changes to PAYE deductions or repayments for the 2002-03 year of assessment. They now must make their changes on the first pay day after the 17 June as opposed to the 17 May.
5. Employers and pension providers are normally asked to implement any changes to codes and tax tables on the first pay day after 17 May, backdated to the start of the proposed tax year. The Budget was on 17 April this year where it was announced that the income tax rate bands and Children's Tax Credit and Blind Person's Allowance were being increased by statutory indexation. So that employers have sufficient time the implementation date is being extended this year to the first pay day after 17 June 2002.