Finance Act 1911

Finance Act 1911[a]
Act of Parliament
coat of arms
Parliament of the United Kingdom
Long titleAn Act to grant certain duties of Customs and Inland Revenue, to alter other duties, and to amend the Law relating to Customs and Inland Revenue (including Excise) and the National Debt, and to make other provisions for the financial arrangements of the year.
Citation1 & 2 Geo. 5. c. 48
Territorial extent United Kingdom
Dates
Royal assent16 December 1911
Commencement16 December 1911[b]
Repealed21 July 2008
Other legislation
Amends
Amended by
Repealed byStatute Law (Repeals) Act 2008
Status: Repealed
Text of statute as originally enacted

The Finance Act 1911 (1 & 2 Geo. 5 c. 48) was an act of the Parliament of the United Kingdom.[1]

Background

The act was enacted following the constitutional crisis caused by the House of Lords’ rejection of the Liberal government’s 1909 Budget, commonly known as the People's Budget. The Budget, introduced by Chancellor of the Exchequer David Lloyd George, proposed higher income taxation and new duties to finance expanding social expenditure, and its rejection marked a significant departure from constitutional convention.[2]

The resulting political crisis led to two general elections in 1910, January and December, and culminated in the passage of the Parliament Act 1911, which restricted the House of Lords’ power to block legislation and removed their ability to veto money bills.[3]

The a forctmed part of this wider settlement by giving statutory effect to fiscal measures that had previously been delayed or contested, and by consolidating changes to income taxation within the evolving framework of early twentieth-century British public finance.[4]

Provisions

The act increased the standard (basic) rate of income tax from nine pence in the pound (9d) to one shilling and two pence in the pound (1s 2d), while leaving the additional rate (supertax) on higher incomes unchanged.[1] Under the pre-decimal currency system, one pound sterling was divided into 240 pence, meaning that a rate of 9d represented 3.75 per cent of income, while 1s 2d (14d) represented approximately 5.83 per cent.[5] This standard rate of income tax would remained unchanged until 1916, when it was increased in response to the fiscal demands of the First World War.[6]

Income tax structure

Although the standard rate of income tax in 1911 was one shilling and two pence in the pound (1s 2d), income tax was not payable on the first £160 of income.[7] Above this level, liability was reduced through a system of abatements, with the full standard rate applying only once abatements were exhausted.[7] As a result, income tax applied to a relatively small proportion of the population, and only a minority of taxpayers paid the full basic rate.[8][9]

An additional duty (supertax) applied only to individuals with total incomes exceeding £5,000 per year, charged at six pence in the pound on the relevant portion of income.[10] The Finance Act 1911 did not alter the supertax threshold or rate, which remained governed by the provisions introduced in 1909–10.[10]

Income band (1911)Marginal rateNotes
Up to £1600%Exempt from income tax[7]
Above £160 (subject to abatements)1s 2d in the £ (14d ≈ 5.83%)Reduced liability until abatements exhausted[7][8]
Total income above £5,000Additional duty (supertax) at 6d in the £ (≈2.5%)Applied only above the supertax threshold[10]
Gross incomeExempt amountTaxable after abatementBasic tax payableCumulative tax payableNotes
£150£150£0£0£0Below income tax threshold[7]
£200£160£40£2 6s 8d£2 6s 8dAbatement reduces liability[7]
£400£160£240£14£14Effective rate below statutory rate[7][8]
£700£160£540£31 10s£31 10sFull basic rate applies[7]
£1,000£160£840£49£49No supertax liability[7]
£5,000£160£4,840£282 6s 8d£282 6s 8dSupertax threshold reached[10]
£10,000£160£9,840£573£698Supertax applies above £5,000[10]

Note: The examples above illustrate the effect of statutory exemptions and abatements under the income tax regime in force in 1911. Actual liability depended on income composition and reliefs, and the figures are illustrative rather than exhaustive.[7][8]

Subsequent developments

Section 16, so far as unrepealed, was repealed for Northern Ireland by section 1 of, and the first schedule to, the Statute Law Revision Act 1953 (2 & 3 Eliz. 2. c. 5), which came into force on 18 December 1953.[11]

Sections 21 and 22(2) of the act were repealed by section 1(1) of, and part XIII of schedule 1 to, the Statute Law (Repeals) Act 1973, which came into force on 18 July 1973.[12]

The whole act was repealed by section 1(1) of, and part 8 of schedule 1 to, the Statute Law (Repeals) Act 2008, which came into force on 21 July 2008.[13]

Notes

References

  1. 1 2 "Finance Act 1911". legislation.gov.uk. Retrieved 6 January 2026.
  2. ↑ McLean, Iain. "The 1909 budget and the destruction of the unwritten constitution". History & Policy. Retrieved 6 January 2026.
  3. ↑ "Parliament Act of 1911". Encyclopaedia Britannica. 3 August 2025. Retrieved 6 January 2026.
  4. ↑ Daunton, Martin (2002). Just Taxes: The Politics of Taxation in Britain, 1914–1979. Cambridge University Press. ISBN 9780521814003.
  5. ↑ "Pound sterling". Encyclopaedia Britannica. Retrieved 6 January 2026.
  6. ↑ Daunton, Martin (2002). Just Taxes: The Politics of Taxation in Britain, 1914–1979. Cambridge University Press. p. 21. ISBN 9780521814003.
  7. 1 2 3 4 5 6 7 8 9 10 "Finance (1909–10) Act 1910, Part IV (abatements and exemptions)". legislation.gov.uk. Retrieved 6 January 2026.
  8. 1 2 3 4 Daunton, Martin (2002). Just Taxes: The Politics of Taxation in Britain, 1914–1979. Cambridge University Press. pp. 20–22. ISBN 9780521814003.
  9. ↑ Atkinson, A. B. Top Incomes in the United Kingdom over the Twentieth Century (PDF) (Report). Nuffield College, University of Oxford. pp. 21–23. Retrieved 6 January 2026.
  10. 1 2 3 4 5 "Finance (1909–10) Act 1910, section 66 — Super-tax". legislation.gov.uk. Retrieved 6 January 2026.
  11. ↑ "Statute Law Revision Act 1953", legislation.gov.uk, The National Archives, Eliz2/2-3 c. 5
  12. ↑ "Statute Law (Repeals) Act 1973", legislation.gov.uk, The National Archives, 1973 c. 39
  13. ↑ "Statute Law (Repeals) Act 2008", legislation.gov.uk, The National Archives, 2008 c. 12

Further reading

  • Daunton, Martin (2002). Just Taxes: The Politics of Taxation in Britain, 1914–1979. Cambridge University Press. ISBN 9780521814003.
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