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PART 2 continued CHAPTER 3 continued
(1) This section supplements the provisions about tax reductions in Step 6 of the calculation in section 23.
(2) A tax reduction may be deducted at Step 6 only so far as there is sufficient tax calculated at Step 5 of the calculation from which to deduct it.
(3) In deciding whether there is sufficient tax calculated at Step 5 from which to deduct a tax reduction, tax reductions already deducted at Step 6 must be taken into account.
(4) Subsections (2) and (3) apply in addition to—
(a) section 796(1) and (2) of ICTA (limits on credit for foreign tax), and
(b) any other provision of the Income Tax Acts that limits the amount of a tax reduction.
(5) For the purposes of this Chapter, a person is treated as being entitled to a tax reduction under section 788 of ICTA if the person is entitled to credit against income tax under double taxation arrangements.
(1) If the taxpayer is an individual, the provisions referred to at Step 7 of the calculation in section 23 are—
section 424 (gift aid: charge to tax),
section 205 of FA 2004 (pension schemes: the short service refund lump sum charge),
section 206 of FA 2004 (pension schemes: the special lump sum death benefits charge),
section 208(2)(a) of FA 2004 (pension schemes: the unauthorised payments charge),
section 209(3)(a) of FA 2004 (pension schemes: the unauthorised payments surcharge),
section 214 of FA 2004 (pension schemes: the lifetime allowance charge),
section 227 of FA 2004 (pension schemes: the annual allowance charge), and
section 7 of F(No.2)A 2005 (social security pension lump sum).
(2) If the taxpayer is a trustee, the provision referred to at Step 7 of the calculation in section 23 is section 496 (discretionary payments by trustees: tax pool adjustment).
(1) This section applies for the purposes of calculating total income.
(2) Income from which a deduction in respect of income tax is to be made (or treated as made) at the basic or savings rate in force for a tax year is treated as income of that tax year.
(3) If—
(a) a dividend is paid, or another distribution is made, in a tax year,
(b) a person is entitled to a tax credit in respect of the dividend or other distribution, and
(c) the amount or value of the dividend or other distribution is treated under section 398 of ITTOIA 2005 as increased by the amount of the tax credit,
the amount or value as increased is treated as income of that tax year.
(4) Subsections (2) and (3) apply even if all or part of the income, or the dividend or other distribution, accrued or will accrue in a different tax year.
(5) An assessment that has become final and conclusive for income tax purposes for a tax year is also final and conclusive for the purposes of calculating total income.
The liabilities referred to in section 22(2) are income tax liability—
under section 79(1) (capital allowances restrictions: withdrawal of relief),
under section 81(6) (dealings in commodity futures: withdrawal of relief),
under section 112(5) (non-active partners: withdrawal of relief),
under section 235 (withdrawal or reduction of EIS relief),
under sections 266 to 270 (withdrawal or reduction of VCT relief),
under section 372 (withdrawal or reduction of CITR),
under section 512 (heritage maintenance settlements: application of property for non-heritage purposes),
under Chapter 1 of Part 13 (transactions in securities),
under regulations made under section 918(4) (foreign payers of manufactured dividends: Real Estate Investment Trusts: the reverse charge),
under section 920 or 923 (foreign payers of manufactured interest or manufactured overseas dividends: the reverse charge),
under Chapter 15, 16 or 17 of Part 15 (deduction of tax at source: collection mechanisms),
under section 804(5B)(a) of ICTA (recovery of excess credit for overseas tax),
under paragraph 11(3) of Schedule 20 to FA 1994 (recovery of excess credit for overseas tax: changes for facilitating self-assessment),
of the person who is (or persons who are) the responsible person in relation to an employer-financed retirement benefits scheme under section 394(2) of ITEPA 2003,
under Chapter 5 of Part 4 of FA 2004 (registered pension schemes: tax charges), except any liability under a provision mentioned in section 30(1), and
under section 682(4) of ITTOIA 2005 (assessments, adjustments and claims after the administration period), so far as the liability represents a tax reduction given effect at Step 6 of the calculation in section 23.
(1) This Part provides for personal reliefs.
(2) Chapter 2 provides for entitlement to a personal allowance and a blind person’s allowance.
(3) Chapter 3 provides for tax reductions for married couples and civil partners.
(4) Chapter 4 contains provision applicable for the purposes of Chapters 2 and 3, in particular—
(a) requirements about residence etc of claimants to allowances under Chapter 2 or tax reductions under Chapter 3, and
(b) indexation of the amounts of those allowances and tax reductions.
(1) In this Chapter—
(a) sections 35, 36 and 37 deal with entitlement to a personal allowance,
(b) section 38 deals with entitlement to a blind person’s allowance, and
(c) section 39 deals with the transfer of part of a blind person’s allowance to a spouse or civil partner.
(2) An allowance under this Chapter is given effect at Step 3 of the calculation in section 23.
An individual who makes a claim is entitled to a personal allowance of £5,035 for a tax year if the individual—
(a) is under the age of 65 throughout the tax year, and
(b) meets the requirements of section 56 (residence etc).
(1) An individual who makes a claim is entitled to a personal allowance of £7,280 for a tax year if the individual—
(a) is 65 or over at some time in the tax year, but under 75 throughout the tax year, and
(b) meets the requirements of section 56 (residence etc).
(2) For an individual whose adjusted net income for the tax year exceeds £20,100, the allowance under subsection (1)—
(a) is reduced by half the excess, but
(b) is not reduced below the amount of a personal allowance under section 35.
(3) For the meaning of “adjusted net income” see section 58.
(1) An individual who makes a claim is entitled to a personal allowance of £7,420 for a tax year if the individual—
(a) is 75 or over at some time in the tax year, and
(b) meets the requirements of section 56 (residence etc).
(2) For an individual whose adjusted net income for the tax year exceeds £20,100, the allowance under subsection (1)—
(a) is reduced by half the excess, but
(b) is not reduced below the amount of a personal allowance under section 35.
(3) For the meaning of “adjusted net income” see section 58.
(1) An individual who makes a claim is entitled to a blind person’s allowance of £1,660 for a tax year if the individual—
(a) meets the first or second condition for the whole or part of the tax year, and
(b) meets the requirements of section 56 (residence etc).
(2) The first condition is that the individual is registered as a blind person in a register kept under section 29 of the National Assistance Act 1948 (c. 29) (registers kept by local authorities in England and Wales).
(3) The second condition is that—
(a) the individual is ordinarily resident in Scotland or Northern Ireland, and
(b) because of the individual’s blindness, the individual is unable to do any work for which eyesight is essential.
(4) If an individual who is entitled to a blind person’s allowance for a particular tax year—
(a) became registered as a blind person in a register kept under section 29 of the National Assistance Act 1948 in the tax year, but
(b) obtained the evidence of blindness on the basis of which the registration was made in the preceding tax year,
the individual is treated as having met the first condition for the whole of the preceding tax year.
(1) This section applies to an individual who is entitled to a blind person’s allowance under section 38 for a tax year if—
(a) the individual is a person whose spouse or civil partner is living with the individual for the whole or any part of the tax year, and
(b) the spouse or civil partner meets the requirements of section 56 (residence etc).
(2) If—
(a) the allowance exceeds the individual’s remaining relievable income,
(b) the individual makes an election, and
(c) the individual’s spouse or civil partner makes a claim,
the individual’s spouse or civil partner is entitled to an allowance for the tax year equal to the amount of the excess.
(3) The individual’s remaining relievable income is the amount found by—
(a) taking the amount of the individual’s net income, and
(b) subtracting any personal allowance to which the individual is entitled for the tax year.
(1) An election under section 39—
(a) must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year to which it relates, and
(b) cannot be withdrawn.
(2) If an individual makes an election for a tax year under section 39 the individual is treated as also giving notice under section 51(4) that section 51(1) (tax reductions for married couples and civil partners: transfer of unused relief) is to apply for the tax year.
(1) Any allowance to which an individual is entitled under this Chapter for any tax year, including the tax year in which the individual dies, is given in full.
(2) If an individual was due to reach the age of 65 in a tax year, but dies in the tax year before reaching that age, the individual is treated for the purposes of section 36 as having reached the age of 65 in the tax year.
(3) If an individual was due to reach the age of 75 in a tax year, but dies in the tax year before reaching that age, the individual is treated for the purposes of sections 36 and 37 as having reached the age of 75 in the tax year.
(1) This Chapter contains provisions about entitlement to tax reductions in a case where a party to a marriage or civil partnership was born before 6 April 1935.
(2) Individuals are entitled to tax reductions under the following provisions of this Chapter—
(a) section 45 (marriages before 5 December 2005),
(b) section 46 (marriages and civil partnerships on or after 5 December 2005),
(c) section 47 (election by individual to transfer relief under section 45 or 46),
(d) section 48 (joint election to transfer relief under section 45 or 46),
(e) section 49 (election for partial transfer back of relief),
(f) section 51 (transfer of unused relief), and
(g) section 52 (transfer back of unused relief).
(3) The tax reductions under sections 45 to 49 are subject to section 54 (tax reductions in the year of marriage or entry into civil partnership).
(4) A tax reduction under this Chapter is given effect at Step 6 of the calculation in section 23.
In this Chapter “the minimum amount” means £2,350.
(1) In this Chapter “an election for the new rules to apply” means an election made by a husband and wife who got married before 5 December 2005 for the new rules to apply to them instead of the old rules.
(2) In subsection (1)—
“the new rules” means the rules for relief under section 46 (marriages and civil partnerships on or after 5 December 2005), and
“the old rules” means the rules for relief under section 45 (marriages before 5 December 2005).
(3) An election for the new rules to apply—
(a) must be made jointly by the parties to the marriage,
(b) must be made before the first tax year for which it is to be in force,
(c) continues in force in each subsequent tax year, and
(d) cannot be withdrawn.
(1) If a man—
(a) makes a claim for a tax year, and
(b) meets the conditions set out in subsection (2),
he is entitled to a tax reduction for the tax year of 10% of the amount specified in subsection (3)(a) or (b) (as applicable).
(2) The conditions are that—
(a) for the whole or part of the tax year he is married and his wife is living with him,
(b) the marriage took place before 5 December 2005 and no election for the new rules to apply is in force for the tax year,
(c) he or his wife was born before 6 April 1935, and
(d) he meets the requirements of section 56 (residence etc).
(3) The amount is—
(a) £6,135, if either the man or his wife is aged 75 or over at some time in the tax year, and
(b) £6,065, in any other case.
(4) For a man whose adjusted net income for the tax year exceeds £20,100, the amounts specified in subsection (3) are reduced by—
(a) half the excess, less
(b) any reduction in his personal allowance under section 36(2) or 37(2).
(5) But subsection (4) does not reduce the amounts specified in subsection (3) below the minimum amount.
(6) For the meaning of “adjusted net income” see section 58.
(1) If an individual—
(a) makes a claim for a tax year, and
(b) meets the conditions set out in subsection (2),
the individual is entitled to a tax reduction for the tax year of 10% of the amount specified in subsection (3)(a) or (b) (as applicable).
(2) The conditions are that—
(a) for the whole or part of the tax year the individual is married or in a civil partnership and is living with the spouse or civil partner,
(b) the marriage took place, or the civil partnership was formed, on or after 5 December 2005 or, if the marriage took place before that date, an election for the new rules to apply is in force for the tax year,
(c) the individual, or the spouse or civil partner, was born before 6 April 1935,
(d) the individual meets the requirements of section 56 (residence etc), and
(e) the individual’s net income for the tax year exceeds that of the spouse or civil partner or, if they have the same amount of net income for the tax year, the individual is specified in an election as the person to be entitled to relief under this section for the year.
(3) The amount is—
(a) £6,135, if either the individual, or the spouse or civil partner, is aged 75 or over at some time in the tax year, and
(b) £6,065, in any other case.
(4) For an individual whose adjusted net income for the tax year exceeds £20,100, the amounts specified in subsection (3) are reduced by—
(a) half the excess, less
(b) any reduction in the individual’s personal allowance under section 36(2) or 37(2).
(5) But subsection (4) does not reduce the amounts specified in subsection (3) below the minimum amount.
(6) An election under subsection (2)(e)—
(a) is to be made jointly by the parties to the marriage or civil partnership, and
(b) is to be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year to which the election relates.
(7) For the meaning of “adjusted net income” see section 58.
(1) If—
(a) an individual’s spouse or civil partner is entitled to a tax reduction under section 45 or 46 for a tax year, and
(b) the individual meets the conditions set out in subsection (2),
the individual is entitled to a tax reduction for that tax year of 10% of half the minimum amount.
(2) The conditions are that the individual—
(a) has made an election which is in force for the tax year,
(b) makes a claim, and
(c) meets the requirements of section 56 (residence etc).
(3) If an individual is entitled to a tax reduction under subsection (1), the tax reduction to which the individual’s spouse or civil partner is entitled under section 45 or 46 is calculated for the tax year as if the appropriate amount were reduced by half the minimum amount.
(4) In subsection (3) “the appropriate amount” means—
(a) if the individual’s spouse is entitled to a tax reduction under section 45, the amount specified in section 45(3)(a) or (b) (as applicable), after any reductions under section 45(4) and 54(2), or
(b) if the individual’s spouse or civil partner is entitled to a tax reduction under section 46, the amount specified in section 46(3)(a) or (b) (as applicable), after any reductions under sections 46(4) and 54(2).
(1) If—
(a) an individual’s spouse or civil partner is entitled to a tax reduction under section 45 or 46 for a tax year, and
(b) the conditions set out in subsection (2) are met,
the individual is entitled to a tax reduction for that tax year of 10% of the minimum amount.
(2) The conditions are that—
(a) the individual and the individual’s spouse or civil partner have made a joint election which is in force for the tax year,
(b) the individual makes a claim, and
(c) the individual meets the requirements of section 56 (residence etc).
(3) If an individual is entitled to a tax reduction under subsection (1), the tax reduction to which the individual’s spouse or civil partner is entitled under section 45 or 46 is calculated for the tax year as if the appropriate amount were reduced by the minimum amount.
(4) In subsection (3) “the appropriate amount” means—
(a) if the individual’s spouse is entitled to a tax reduction under section 45, the amount specified in section 45(3)(a) or (b) (as applicable), after any reductions under section 45(4) and 54(2), or
(b) if the individual’s spouse or civil partner is entitled to a tax reduction under section 46, the amount specified in section 46(3)(a) or (b) (as applicable), after any reductions under sections 46(4) and 54(2).
(1) If an individual whose spouse or civil partner is entitled under section 48(1) to a tax reduction for a tax year—
(a) has made an election which is in force for the tax year, and
(b) makes a claim,
the individual is entitled to a tax reduction for that tax year of 10% of half the minimum amount (in addition to any tax reduction to which the individual is entitled under section 45 or 46).
(2) The amount of the tax reduction to which the individual’s spouse or civil partner is entitled under section 48(1) for that tax year is 10% of half the minimum amount (instead of 10% of the minimum amount).
(1) This section applies to elections under sections 47 to 49.
(2) An election—
(a) must, except in the cases dealt with by subsection (3), be made before the first tax year in which it is to be in force, and
(b) continues in force in each subsequent tax year until it is withdrawn.
(3) An election—
(a) may be made in the first tax year in which it is to be in force if that is the tax year in which the marriage takes place or the civil partnership is formed, and
(b) may be made in the first 30 days of the first tax year in which it is to be in force if appropriate notice is given before the tax year.
(4) In subsection (3), “appropriate notice” means notice given to an officer of Revenue and Customs by the individual or (in the case of a joint election) individuals concerned that it is intended to make the election.
(5) An election may be withdrawn only by—
(a) a notice given by the individual or individuals by whom the election was made, or
(b) a subsequent election under section 47, 48 or 49.
(6) If an election is withdrawn under subsection (5)(a), the withdrawal does not have effect until the tax year after the one in which the notice is given.
(7) A notice under subsection (5)(a)—
(a) must be given to an officer of Revenue and Customs, and
(b) must be in the form specified by the Commissioners for Her Majesty’s Revenue and Customs.
(1) If—
(a) an individual’s spouse or civil partner is entitled to a tax reduction under section 45 or 46 for a tax year,
(b) the spouse or civil partner’s MCA tax reductions are greater than the spouse or civil partner’s comparable tax liability, and
(c) the conditions set out in subsection (4) are met,
the individual is entitled to a tax reduction for that tax year equal to the unused part of the spouse or civil partner’s MCA tax reductions.
(2) The spouse or civil partner’s MCA tax reductions are the sum of—
(a) the tax reduction to which the spouse or civil partner is entitled under section 45 or 46, and
(b) any tax reduction under section 49 to which the spouse or civil partner is entitled for the tax year.
(3) The unused part of the spouse or civil partner’s MCA tax reductions is equal to—
(a) the spouse or civil partner’s MCA tax reductions, less
(b) the spouse or civil partner’s comparable tax liability.
(4) The conditions are that—
(a) the spouse or civil partner gives notice to an officer of Revenue and Customs that subsection (1) is to apply for the tax year,
(b) the individual makes a claim, and
(c) the individual meets the requirements of section 56 (residence etc).
(5) The tax reduction to which the individual is entitled under subsection (1) is in addition to any tax reduction to which the individual is entitled under section 47 or 48.
(6) The meaning of “comparable tax liability” is given in section 53.
(1) If—
(a) an individual’s spouse or civil partner is entitled to a tax reduction under section 47 or 48 for a tax year,
(b) the tax reduction is greater than the spouse or civil partner’s comparable tax liability, and
(c) the conditions set out in subsection (3) are met,
the individual is entitled to a tax reduction for that tax year equal to the unused part of the spouse or civil partner’s tax reduction.
(2) The unused part of the spouse or civil partner’s tax reduction is equal to—
(a) the tax reduction to which the spouse or civil partner is entitled, less
(b) the spouse or civil partner’s comparable tax liability.
(3) The conditions are that—
(a) the spouse or civil partner gives notice to an officer of Revenue and Customs that subsection (1) is to apply for the tax year, and
(b) the individual makes a claim.
(4) The tax reduction to which the individual is entitled under subsection (1) is in addition to any tax reduction to which the individual is entitled under section 45, 46 or 49.
(5) The meaning of “comparable tax liability” is given in section 53.
Income Tax Act 2007