Finance Bill

With this it will be convenient to discuss the following: Government new clause 12— Basic rate limit. New clause 1A— Interim statements to Parliament — ‘On any occasion when the Chancellor of the Exchequer or a Treasury Minister announces to Parliament any change or intended future change to— (a) income tax rates, (b) income tax thresholds, or (c) income tax personal allowances, other than in the course of a statement to Parliament presenting a Budget or Pre-Budget Report, the Treasury must publish a current forecast of— (a) public sector net borrowing, (b) growth rate of gross domestic product, and (c) consumer price inflation, for the current fiscal year and each of the subsequent four fiscal years, updated to take account of that announcement.’. New clause 4— Income tax rates — ‘(1) The amendments made by the provisions of this Act specified in subsection (2) shall cease to have effect at midnight on 5 January 2009 unless the conditions set out in subsection (3) have been satisfied. (2) The provisions referred to in subsection (1) are— (a) section 3(2) and (3), and (b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate). (3) The conditions referred to in subsection (1) are that— (a) the Chancellor of the Exchequer shall have laid before the House of Commons a statement setting out the measures taken, or intended to be taken, to mitigate the effect of the amendments made by the provisions of this Act specified in subsection (4), when taken together, on those for whom such effect is a net increase in income tax payable, and (b) the House of Commons shall by resolution have approved such statement. (4) The provisions referred to in subsection (3) are— (a) sections 1, 3(2) and 3(3), (b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate), and (c) any other provision of this Act the effect of which is to change the bands of income on which income tax is charged.’. New clause 6— Harmonisation of income tax and national insurance contributions — ‘(1) If for any tax year— (a) the personal allowance under section 35 of the ITA 2007 (c. 3) is set at an amount which is not equal to the amount of the primary threshold under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4), or (b) the sum of the personal allowance and the basic rate limit under sections 35 and 10(2) of the ITA 2007 (c. 3) is set at an amount which is not equal to the upper earnings limit under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4), the Treasury shall within one month of the passing of the Act which sets the personal allowance or basic rate limit lay before Parliament a report explaining the matters set out in subsection (2). (2) Those matters are— (a) why the amounts have diverged for the year, and the expected future path of the amounts in relation to each other; and (b) the estimated cost to— (i) employers, and (ii) HMRC, of operating a system of divergent thresholds and the savings that are expected to result from a convergence of those thresholds.’. New clause 10— Personal allowances — ‘(1) The Treasury must by regulations made by statutory instrument vary section 35 of ITA 2007 (personal allowances for those aged under 65) so as to achieve the outcome specified in subsections (2) and (3). (2) For the tax year 2008-09 50 per cent. of income in excess of £6,400 (up to a maximum of £600) shall be added to the personal allowance, subject to subsection (3). (3) That addition shall be withdrawn at the rate of £10 for every £100 of income in excess of £7,600, so that— (a) a taxpayer with an income of £7,600 receives an addition to the personal allowance of £120, and (b) a taxpayer with an income of £13,600 receives no such addition. (4) Regulations under this section may make such transitional or incidental provision as the Treasury thinks fit. (5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.’. New clause 13— Independent review of income taxation — ‘(1) The Chancellor of the Exchequer must appoint a person to review the operation of the provisions of the ITA 2007 and sections 1 to 3 (income tax) of this Act. (2) That person must, within 12 months of the coming into force of this Act, carry out and report on a review of those provisions and, where he does so, must send a report on the outcome of his review to the Chancellor of the Exchequer as soon as reasonably practicable after completing the review. (3) That person must, upon the amendment by future legislation of any provision contained in ITA 2007, carry out and report on a review under this section within 12 months of that amendment coming into force. (4) A report received by the Chancellor of the Exchequer under subsection (2) must be laid before the House of Commons.’. New clause 20— Personal allowances (No. 2) — ‘(1) The Treasury must by regulations made by statutory instrument vary section 35 of ITA 2007 (personal allowances for those aged under 65) so as to achieve the outcome specified in subsections (2) and (3). (2) For the tax year 2008-09 50 per cent. of income in excess of £6,400 (up to a maximum of £600) shall be added to the personal allowance, subject to subsection (3). (3) That addition shall be withdrawn at the rate of £10 for every £100 of income in excess of £7,600, so that— (a) a taxpayer with an income of £7,600 receives an addition to the personal allowance of £600, and (b) a taxpayer with an income of £13,600 receives no such addition. (4) Regulations under this section may make such transitional or incidental provision as the Treasury thinks fit. (5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.’. Amendment No. 102, in clause 1, page 1, line 8, at end add ‘, unless subsection (3) applies. (3) If this subsection applies— (a) the starting 10%, (b) the basic rate is 22%, and (c) the higher rate is 40%. (4) Subsection (3) applies in the case of any person who has notified the Commissioners for Her Majesty’s Revenue and Customs that he wishes his income to be charged at the rates specified in that subsection and not at the rates specified in subsection (2).’. Amendment No. 103, in clause 3, page 2, line 18, leave out subsections (2) and (3). Amendment No. 104, page 2, line 22, leave out subsection (5). Amendment No. 105, page 2, line 26, leave out ‘the starting rate and’. Amendment No. 6, page 2, line 27, at end insert— ‘(8) The Chancellor of the Exchequer shall, within six months of the coming into force of this section, lay before the House of Commons a report containing an assessment of the combined impact of— (a) the increase in personal allowances, and (b) the abolition of the starting rate of income tax, on individuals with a gross income under £13,000 per annum.’. Amendment No. 106, in schedule 1, page 101, line 15, after ‘(2)’, insert ‘Unless section 1(3) of FA 2008 applies,’. Amendment No. 107, page 101, line 17, at end insert— ‘(3A) After subsection (2) insert— ““(2A) If section 1(3) of FA 2008 applies, income tax is charged— (a) at the starting rate on an individual’s income up to the starting rate limit, and (b) at the basic rate on an individual’s income above the starting rate and up to the basic rate limit.””’. Government amendment No. 5 Amendment No. 108, page 101, line 24, at end insert— ‘(8) The starting rate limit is £2,150.’. Amendment No. 109, page 101, line 25, leave out sub-paragraph (6).