Section 21 — Income Tax Act 2007: Indexation of the basic rate limit and starting rate limit for savings

Indexation of the basic rate limit and starting rate limit for savings 21 1 This section applies if the consumer prices index for the September before the start of a tax year is higher than it was for the previous September. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 The basic rate limit for the tax year is the amount found as follows. Step 1 Increase the basic rate limit for the previous tax year by the same percentage as the percentage increase in the consumer prices index . Step 2 If the result of Step 1 is a multiple of £100, it is the basic rate limit for the tax year. If the result of Step 1 is not a multiple of £100, round it up to the nearest amount which is a multiple of £100. That amount is the basic rate limit for the tax year. 3A The starting rate limit for savings for the tax year is the amount found as follows. Step 1 Increase the starting rate limit for savings for the previous tax year by the same percentage as the percentage increase in the consumer prices index . Step 2 If the result of Step 1 is a multiple of £10, it is the starting rate limit for savings for the tax year. If the result of Step 1 is not a multiple of £10, round it up to the nearest amount which is a multiple of £10. That amount is the starting rate limit for savings for the tax year.

4 Subsections (3) and (3A) do not require a change to be made in the amounts deductible or repayable under PAYE regulations during the period beginning on 6 April and ending on 17 May in the tax year.

5 Before the start of the tax year the Treasury must make an order replacing the amounts specified in sections 10 and 12 with the amounts which, as a result of subsections (3) and (3A) , are the basic rate limit and starting rate limit for savings for the tax year.

6 In this section “ consumer prices index ” means the all items consumer prices index published by the Statistics Board.