Income Tax Act 2007 section 10

Income charged at the basic, higher and additional rates: individuals

Section 10 sets out the three main rate bands — basic, higher and additional — at which income tax is charged on an individual's non-savings, non-dividend income, and identifies the statutory limits that define each band.

• Income up to the basic rate limit of £37,700 is charged at the basic rate; income above that limit and up to the higher rate limit is charged at the higher rate; and income above the higher rate limit is charged at the additional rate.
• The higher rate limit for a tax year equals twice the personal allowance (section 35(1)) plus the income threshold at which the personal allowance begins to be withdrawn (section 35(2)), and the Treasury must specify the resulting figure by order before the tax year begins.
• Both the basic rate limit and the higher rate limit can be increased in certain circumstances — specifically where gift aid relief (section 414) or relief for pension contributions (section 192 of FA 2004) applies — and the basic rate limit is also subject to indexation under section 21.
• These general rate bands are overridden where specific rules apply, including Scottish rates, Welsh rates, default rates for non-UK residents, the savings basic/higher/additional rates, the starting rate for savings, the savings nil rate, and dividend rates.