Lower Rate of Tax

The lower rate of income tax, was reduced to 10%, effective April 6 1999, and is payable on the first chunk of your income after you have earned more than your annual Personal Allowance. The lower rate of tax was introduced by Conservative Chancellor Norman Lamont in March 1992. Labour Chancellor Gordon Brown halved the starting rate of tax in his March 1999 Budget.

In Budget 2007, Gordon Brown announced that he would be abolishing this lower rate of tax at the same time as the basic rate of tax was being cut by 2p to 20%. This change is due to take effect in April 2008.

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