Section 12A | Savings income charged at the savings nil rate

(1)This section applies in relation to an individual if—

(a)the amount of the individual's Step 3 income is greater than £L, where £L is the amount of the starting rate limit for savings, and

(b)when the individual's Step 3 income is split into two parts—

(i)one (“the individual's income up to the starting rate for savings”) consisting of the lowest £L of the individual's Step 3 income, and

(ii)the other (“the individual's income above the starting rate limit for savings”) consisting of the rest of the individual's Step 3 income,

some or all of the individual's income above the starting rate limit for savings consists of savings income (whether or not some or all of the individual's income up to the starting rate limit for savings consists of savings income).

(2)In this section—

£A is the amount of the individual's savings allowance (see section 12B),

“the excess” is so much of the individual's income above the starting rate limit for savings as consists of savings income, and

£X is the amount of the excess.

(3)If £X is less than or equal to £A, income tax is charged at the savings nil rate (rather than the basic, higher or additional rate or the default basic, default higher or default additional rate) on the excess.

(4)If £X is more than £A, income tax is charged at the savings nil rate (rather than the basic, higher or additional rate or the default basic, default higher or default additional rate) on the lowest £A of the excess.

(5)Subsections (3) and (4) are subject to any provisions of the Income Tax Acts (apart from sections 10 and 11C) which provide for income to be charged at different rates of income tax in some circumstances.

(6)Section 16 has effect for determining the extent to which the individual's income above the starting rate limit for savings consists of savings income.

(7)For the purposes of this section, an individual's “Step 3 income” is the individual's net income less allowances deducted at Step 3 of the calculation in section 23.