Finance Bill 2002: EXPLANATORY NOTE
CLAUSE 29: PERSONAL ALLOWANCES FOR 2003-04 FOR THOSE AGED 65 OR OVER
SUMMARY
1. This clause determines the personal allowances for those aged 65 or over for the year 2003-04. The personal allowance for those aged between 65 and 74 will be set at £6,610 and the personal allowance for those aged 75 or more will be determined by the indexed amount plus £240. (REV 1)
DETAILS OF THE CLAUSE
2. Subsection (1)(a) specifies the personal allowance for those aged between 65 and 74 (section 257(2) ICTA 1988) for the year 2003-04 to the amount of £6,610.
3. Subsection (1)(b) specifies the personal allowance for those aged 75 or more (section 257(3) ICTA 1988) for the year 2003-04 to the indexed amount plus £240.
4. Subsection (2) disapplies statutory indexation, which would otherwise have increased both personal allowances in line with the increase in the Retail Prices Index in the year to September 2002, except to the extent it is necessary to calculate the personal allowance for those aged 75 or more as stated in subsection (1)(b).
BACKGROUND
5. The personal allowance is the amount of earnings an individual can have before they are required to pay tax. This clause sets the personal allowance for those aged between 65 and 74 to £6,610 and the personal allowance for those aged 75 or more to £240 over the indexed amount for 2003-04. The personal allowance for those under 65 has been set for 2003-04 by clause 28.
6. Unless Parliament otherwise determines, section 257C(1) of the Taxes Act 1988 increases the personal allowances and married couples allowances in line with the increase in the Retail Prices Index in the year to September. Consequently subsection (2) of clause 29 overrides this section for 2003-04 in relation to the personal allowances for those aged 65 or over, except to the extent that it is necessary in the calculation of the age allowance for those aged 75 or more, which is equal to £240 plus the indexed amount.