Income Tax Act 2007 section 12

Income charged at the starting rate for savings

Section 12 sets out when an individual's savings income is charged at the starting rate for savings rather than at the basic rate or default basic rate.

• Savings income falling within the first £5,000 of taxable income is charged at the starting rate for savings instead of the basic rate or default basic rate
• The starting rate for savings only applies to income that is classified as savings income and that would otherwise attract the basic rate or default basic rate
• Other provisions in the Income Tax Acts may override this treatment and charge savings income at different rates in certain circumstances, such as the trust rate
• The ordering rules in the Act treat savings income as the highest part of total income, which determines how much savings income actually falls within the starting rate limit