
 

 
 
 
Abolition of starting and savings rates and creation of starting rate for 
 
 
 5 
 
1  ITA 2007 is amended as follows. 
 
2  For section 7 (savings rate) substitute— 
 
“7  The starting rate for savings 
 
The starting rate for savings is 10%.” 
 10 
3 (1)  Section 10 (income charged at main rates: individuals) is amended as 
 
 
 
(3)  For subsection (2) substitute— 
 
“(2)  Income tax on an individual’s income up to the basic rate limit is 
 15 
charged at the basic rate (except to the extent that, in accordance with 
 
section 12, it is charged at the starting rate for savings).” 
 
(4)  In subsection (4), omit the entry relating to section 12. 
 
(5)  For subsection (5) substitute— 
 
“(5)  The basic rate limit is £36,000. 
 20 
(6)  The basic rate limit is increased in some circumstances: see— 
 
(a)  section 414(2) (gift aid relief), and 
 
(b)  section 192(4) of FA 2004 (relief for pension contributions). 
 
(7)  See section 21 for indexation of the basic rate limit.” 
 
(6)  Accordingly, in the heading, omit “starting,”. 
 25 
4  In section 11(2) (income charged at the basic rate: persons other than 
 
individuals), omit the reference to section 12. 
 

 

 

5  For section 12 substitute— 
 
“12  Income charged at the starting rate for savings 
 
(1)  Income tax is charged at the starting rate for savings (rather than the 
 
basic rate) on so much of an individual’s income up to the starting 
 
rate limit for savings as is savings income. 
 5 
(2)  This is subject to any provisions of the Income Tax Acts (apart from 
 
section 10) which provide for income of an individual to be charged 
 
at different rates of income tax in some circumstances. 
 
(3)  The starting rate limit for savings is £2,320. 
 
(4)  See section 21 for indexation of the starting rate limit for savings. 
 10 
(5)  Section 16 has effect for determining the extent to which a person’s 
 
income up to the starting rate limit for savings consists of savings 
 
 
6  In section 13 (income charged at dividend ordinary and dividend upper 
 
 15 
(a)  in subsection (1)(b), omit “starting or”, and 
 
(b)  in subsection (4), omit “starting,”. 
 
7  In section 16(1) (savings and dividend income to be treated as highest part 
 
of total income), for the words from “the rate” to the end substitute “— 
 
(a)  the extent to which a person’s income up to the starting rate 
 20 
limit for savings consists of savings income, and 
 
(b)  the rate at which income tax would be charged on a person’s 
 
dividend income apart from section 13.” 
 
8 (1)  Section 17 (repayment: tax paid at basic rate instead of starting rate or 
 
savings rate) is amended as follows. 
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(2)  In subsection (1), for “starting or savings rate” substitute “starting rate for 
 
 
(3)  Accordingly, in the heading, for “starting or savings rate” substitute 
 
“starting rate for savings”. 
 
9  For the heading before section 20 substitute— 
 30 
“Indexation of basic rate limit and starting rate limit for savings”. 
 
10  Omit section 20 (starting rate limit and basic rate limit). 
 
11 (1)  Section 21 (indexation of starting and basic rate limits) is amended as 
 
 
 35 
(3)  After subsection (3) insert— 
 
“(3A)  The starting rate limit for savings for the tax year is the amount 
 
 
 
 Increase the starting rate limit for savings for the previous tax year 
 40 
by the same percentage as the percentage increase in the retail prices 
 
 

 

 

 
 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. 
 5 
 That amount is the starting rate limit for savings for the tax year.” 
 
(4)  In subsection (4), for “(2) and (3)” substitute “(3) and (3A)”. 
 
 
(a)  for “section 20” substitute “sections 10 and 12”, 
 
(b)  for “(2) and (3)” substitute “(3) and (3A)”, and 
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(c)  for “starting rate limit and the basic rate limit” substitute “basic rate 
 
limit and starting rate limit for savings”. 
 
(6)  Accordingly, in the heading, for “starting rate limit and the basic rate limit” 
 
substitute “basic rate limit and starting rate limit for savings”. 
 
12  In section 31(2), omit “or savings rate”. 
 15 
13 (1)  Section 158 (form and amount of EIS relief) is amended as follows. 
 
(2)  In subsection (2), for “savings rate” substitute “EIS rate”. 
 
(3)  After that subsection insert— 
 
“(2A)  In this Part “the EIS rate” means 20%.” 
 
14  In section 209(3) (withdrawal or reduction of EIS relief: disposal of shares)— 
 20 
(a)  in the formula, for “S” substitute “EISR”, and 
 
(b)  for the definition of “S” substitute “EISR is the EIS rate.” 
 
15  In section 210(1)(b) (cases where maximum EIS relief not obtained), for 
 
“savings rate for that year” substitute “EIS rate”. 
 
16  In section 213(2) (withdrawal or reduction of EIS relief: value received by 
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(a)  in the formula, for “S” substitute “EISR”, and 
 
(b)  for the definition of “S” substitute “EISR is the EIS rate.” 
 
17  In section 220(1)(b) (cases where maximum EIS relief not obtained), for 
 
“savings rate for that year” substitute “EIS rate”. 
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18  In section 224(2) (withdrawal or reduction of EIS relief: repayments etc of 
 
share capital to other persons)— 
 
(a)  in the formula, for “S” substitute “EISR”, and 
 
(b)  for the definition of “S” substitute “EISR is the EIS rate.” 
 
19  In section 229(1)(b) (cases where maximum EIS relief not obtained), for 
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“savings rate for that year” substitute “EIS rate”. 
 
20  In section 414(2) (relief for gifts to charity), for “section 20” substitute 
 
 
21  In section 486(1) (how allowable expenses are to be set against trust rate 
 
income), in Step 5, for “savings rate” substitute “basic rate”. 
 40 
22 (1)  Section 498 (types of income tax for purposes of section 497) is amended as 
 
 

 

 

(2)  In subsection (1), in Type 3A, for “savings rate” substitute “basic rate”. 
 
(3)  In that subsection, in Type 4, omit “or at the savings rate”. 
 
(4)  In subsection (2A), for “savings rate” substitute “basic rate”. 
 
23  In section 504(3) (treatment of income of unauthorised unit trust), omit “or 
 
 5 
24  In section 745(1) (rates of tax applicable to income charged under sections 
 
720 and 727 etc), for “savings rate” substitute “starting rate for savings”. 
 
25  In section 851(2) (deduction by deposittakers and building societies), for 
 
“savings rate” substitute “basic rate”. 
 
26  In section 874(2) (deduction from payments of yearly interest), for “savings 
 10 
rate” substitute “basic rate”. 
 
27  In section 889(4) (deduction from payments in respect of building society 
 
securities), for “savings rate” substitute “basic rate”. 
 
28  In section 892(2) (deduction from UK public dividends), for “savings rate” 
 
 15 
29  In section 901(4) (deduction from annual payments made by other persons), 
 
for “the applicable rate (see section 902)” substitute “the basic rate in force 
 
for the tax year in which the payment is made”. 
 
30  Omit section 902 (meaning of “applicable rate” in section 901). 
 
31  In section 919(2) (manufactured interest on UK securities: payments by UK 
 20 
residents etc), for “savings rate” substitute “basic rate”. 
 
32  In section 939(2) (duty to retain bonds where issue treated as payment of 
 
interest), for “savings rate” substitute “basic rate”. 
 
33 (1)  Section 989 (definitions) is amended as follows. 
 
(2)  In the definition of “basic rate limit”, for “20(2)” substitute “10”. 
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(3)  Omit the definition of “savings rate”. 
 
(4)  For the definitions of “starting rate” and “starting rate limit” substitute— 
 
““starting rate for savings” has the meaning given by section 7, 
 
“starting rate limit for savings” has the meaning given by 
 
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34  In section 1014(5)(b)(i) (orders and regulations not subject to annulment), for 
 
“starting rate limit and basic rate limit” substitute “basic rate limit and 
 
starting rate limit for savings”. 
 
35  In Schedule 1 (consequential amendments), omit paragraphs 85(2), 86, 112, 
 
151, 152, 191, 244, 259, 279, 530, 535(2), 536(3), 537, 538, 564, 565 and 592(47) 
 35 
 
36 (1)  Schedule 4 (index of defined expressions) is amended as follows. 
 
(2)  After the entry relating to “EIS” insert— 
 


 

 

(3)  For the entries relating to “starting rate” and “starting rate limit” 
 
 
 “starting rate for savings 
     starting rate limit for savings 
   

(4)  Omit the entry relating to “savings rate”. 
 5 
 
 
 
37  TMA 1970 is amended as follows. 
 
38  In section 7(6) (notice of liability to income tax and capital gains tax), for “, 
 10 
the savings rate or the starting rate” substitute “or the starting rate for 
 
 
39  In section 91(3)(c) (effect of interest on reliefs), for “, the savings rate or the 
 
starting rate” substitute “or the starting rate for savings”. 
 
 15 
40  ICTA is amended as follows. 
 
41  In section 468(1A) (authorised unit trusts), for “savings rate” substitute 
 
 
42  In section 468A(1) (openended investment companies), for “savings rate” 
 
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43  In section 552(5)(f)(i) (information: duty of insurers), for “savings rate” 
 
 
44  In section 699A(4)(b) (untaxed sums comprised in the income of the estate), 
 
for “savings rate” substitute “basic rate”. 
 
45  In section 701(3A) (estates of deceased persons in administration), omit— 
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(a)  “, the savings rate” (in both places), 
 
(b)  “at the savings rate or”, and 
 
(c)  subparagraph (ii) of paragraph (b) and the “and” before it. 
 
46  Omit section 789(2) (double taxation arrangements made under old law: 
 
 30 
 
47  In section 88(1) of FA 1989 (insurance companies: policy holders’ share of 
 
profits), for “savings rate” substitute “basic rate”. 
 

 

 

 
48  In section 150A(3)(b) of TCGA 1992 (enterprise investment schemes), for 
 
“savings rate” substitute “basic rate”. 
 
 
49  Omit paragraph 21 of Schedule 6 to FA 1996 (which amends section 789(2) 
 5 
 
 
50  ITTOIA 2005 is amended as follows. 
 
51  In section 465A(1)(b) (gains from contracts for life insurance etc: amounts for 
 
which individuals liable to be treated as highest part of total income), for 
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“savings rate” substitute “basic rate”. 
 
52  In section 466(2) (gains from contracts for life insurance etc: personal 
 
representatives), for “savings rate” substitute “basic rate”. 
 
53  In section 467(7) (gains from contracts for life insurance etc: UK resident 
 
trustees), for “savings rate” substitute “basic rate”. 
 15 
54 (1)  Section 530 (gains from contracts for life insurance etc: income tax treated as 
 
paid) is amended as follows. 
 
(2)  In subsection (1), for “savings rate” substitute “basic rate”. 
 
 
55  In section 535(3) (gains from contracts for life insurance etc: top slicing 
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(a)  for “SRL” in both places substitute “BRL”, and 
 
(b)  for “savings rate” substitute “basic rate”. 
 
56  In section 536(1) (gains from contracts for life insurance etc: top slicing 
 
relieved liabilityone chargeable event), for “savings rate” substitute “basic 
 25 
 
57  In section 537 (gains from contracts for life insurance etc: top slicing relieved 
 
liabilitytwo or more chargeable events), for “savings rate” substitute “basic 
 
 
58  In section 539(5) (gains from contracts for life insurance etc: relief for 
 30 
 
 
(b)  in Step 3, for “2” substitute “1” and omit “other”, and 
 
(c)  in Step 5, omit the sentence relating to Step 2. 
 
59  In section 669(3)(a)(i) (reduction in residuary income: inheritance tax on 
 35 
accrued income), for “, at the savings rate” substitute “of an amount not 
 
exceeding the starting rate limit for savings, at the starting rate for savings”. 
 
60  In section 679(3) (income from which basic amounts are treated as paid), 
 
omit paragraph (b) (apart from the “and” at the end). 
 
61  In section 680(4) (income treated as bearing income tax), for “savings rate” 
 40 
 

 

 

62 (1)  Section 680A (income treated as savings income or dividend income) is 
 
 
 
(a)  for “Subsections (2) and (3) apply” substitute “Subsection (3) 
 
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(b)  omit “the savings rate or”. 
 
 
(4)  In subsection (3), for the words from the beginning to “it” substitute “The 
 
 
 10 
(a)  for “Subsections (5) and (6) apply” substitute “Subsection (6) 
 
 
(b)  omit “the savings rate or”. 
 
 
(7)  In subsection (6), for the words from the beginning to “it” substitute “The 
 15 
 
(8)  Accordingly, in the heading omit “savings income or”. 
 
63 (1)  Schedule 4 (index of defined expressions) is amended as follows. 
 
(2)  For the entry relating to “starting rate” substitute— 
 
 “starting rate for savings 
 section 7 of ITA 2007 (as 
  20    applied by section 989 of that 
         starting rate limit for savings 
 section 12 of ITA 2007 (as 
     applied by section 989 of that 
       25 

(3)  Omit the entry relating to “savings rate”. 
 
 
64  In section 7(5) of F(No.2)A 2005 (charge to income tax on social security 
 
 
(a)  omit paragraph (b), and 
 30 
(b)  in paragraph (c), for “exceeds the starting rate limit” substitute “is 
 
 
 
 
65  Apart from the amendments made by paragraph 11, the amendments made 
 35 
by this Schedule have effect for the tax year 200809 and subsequent tax 
 
 

 
