Starting rate of UK income tax


Starting rate of UK income tax

The starting rate of income tax, often known as the 10p rate, was the lowest rate of personal income taxation imposed in the United Kingdom from 1999 to 2008. It was introduced by the Chancellor of the Exchequer, Gordon Brown, in his 1999 budget and abolished by him in his last budget in 2007.

Description

The starting rate was introduced in Gordon Brown's third budget as Chancellor.] By 2008 the starting rate had been raised to apply to income between £5,225 and £7,445. [cite web |title=2008 Tax Calculation Guide |url=http://www.hmrc.gov.uk/worksheets/sa110-notes.pdf |format=PDF |publisher=HMRC] The starting rate was the lowest rate of income tax, and as such was the only income tax paid by 1.8 million of the lowest earners. Gordon Brown said of its introduction: [cite web |publisher=BBC News |date=10 March 1999 |title=Digesting the Budget|url=http://news.bbc.co.uk/1/hi/events/budget_99/news/294083.stm]

"The 10p rate is very important because it's a signal about the importance we attach about getting people into work and it's of most importance to the low paid. This is not about gimmicks this is about tax reform that encourages work and families, on the families side it is replacing what was an anomalous married couples' allowance and replace it with a child tax credit."

Abolition

The 2007 budget, Gordon Brown's last as Chancellor, abolished the starting rate tax rate from April 2008. [cite web|title=Budget 2007: report|url=http://www.hm-treasury.gov.uk/budget/budget_07/report/bud_budget07_repindex.cfm|publisher=HM Treasury] This meant that all income above the personal allowance (£5,435 in 2008) and below the higher rate band would be taxed at 20%, with the effect that taxpayers earning above the personal allowance would be up to £232 worse off each year. [cite news |publisher=BBC News |url=http://news.bbc.co.uk/1/hi/uk/7334448.stm |title=Low-earners fear tax changes |date=7 April 2008 |accessdate=2008-05-19] The abolition of the band came into effect at the start of the 2008 tax year. It has been the source of considerable criticism from within the Labour Party. High profile figures have protested, including former minister Frank Fieldcite news|url=http://www.independent.co.uk/news/people/frank-field-frank-ndash-but-so-sorry-830365.html|title=Frank Field: Frank – but so sorry|date=18 May 2008|publisher=The Independent|accessdate=2008-05-18] and the MP Angela Christine Smith. [cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/7353273.stm|title= MP decides not to quit government|date=17 April 2008|publisher=BBC News|accessdate=2008-05-18]

References


Wikimedia Foundation. 2010.

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