FINANCE BILL 2000
CLAUSE 31: CHARGE AND RATES OF INCOME TAX FOR 2000-01
SUMMARY
1. Clause 31 imposes the income tax charge for 2000-01, and sets the starting, basic and higher rates of tax at 10 per cent, 22 per cent, and 40 per cent respectively. (*REV2)
BACKGROUND
2. Clause 31 sets the rates of income tax for 2000-01 and implements the reduction in the basic rate of income tax from 23 per cent to 22 per cent. The starting and higher rates of tax remain at 10 per cent and 40 per cent respectively.
The starting rate of tax was introduced in 1999-2000. In 2000-01, it applies to the first £1,520 of an individual's taxable income (other than dividends).
4. Clause 32 extends the starting rate band to cover savings income with effect from 1999-00, so that the 10 per cent rate applies whether the income in the band is from earnings, pension or savings. 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.