21 Indexation of the basic rate limit and starting rate limit for savings
(1) This section applies if the consumer prices index for the September before the start of a tax year is higher than it was for the previous September.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) The basic rate limit for the tax year is the amount found as follows.
Step 1
Increase the basic rate limit for the previous tax year by the same percentage as the percentage increase in the consumer prices index.
Step 2
If the result of Step 1 is a multiple of £100, it is the basic rate limit for the tax year.
If the result of Step 1 is not a multiple of £100, round it up to the nearest amount which is a multiple of £100.
That amount is the basic rate limit for the tax year.
(3A) The starting rate limit for savings for the tax year is the amount found as follows.
Step 1
Increase the starting rate limit for savings for the previous tax year by the same percentage as the percentage increase in the consumer prices index.
Step 2
If the result of Step 1 is a multiple of £10, it is the starting rate limit for savings for the tax year.
If the result of Step 1 is not a multiple of £10, round it up to the nearest amount which is a multiple of £10.
That amount is the starting rate limit for savings for the tax year.
(4) Subsections (3) and (3A) do not require a change to be made in the amounts deductible or repayable under PAYE regulations during the period beginning on 6 April and ending on 17 May in the tax year.
(5) Before the start of the tax year the Treasury must make an order replacing the amounts specified in sections 10 and 12 with the amounts which, as a result of subsections (3) and (3A), are the basic rate limit and starting rate limit for savings for the tax year.
(6) In this section “consumer prices index” means the all items consumer prices index published by the Statistics Board.
(1) This Chapter deals with the calculation of a person's income tax liability for a tax year.
(2) But it does not deal with any income tax liability mentioned in section 32.
(3) This Chapter needs to be read with Chapter 1 of Part 14 (limits on liability to income tax of non-UK residents).
To find the liability of a person (“the taxpayer”) to income tax for a tax year, take the following steps. Step 1
Identify the amounts of income on which the taxpayer is charged to income tax for the tax year.
The sum of those amounts is “total income”.
Each of those amounts is a “component” of total income.
Step 2
Deduct from the components the amount of any relief under a provision listed in relation to the taxpayer in section 24 to which the taxpayer is entitled for the tax year.
See sections 24A and 25 for further provision about the deduction of those reliefs.
See also section 24B which provides that a taxpayer’s net income is taken to be £0 in certain cases.
The sum of the amounts of the components left after this step is “net income”.
Step 3
Deduct from the amounts of the components left after Step 2 any allowances to which the taxpayer is entitled for the tax year under Chapter 2 of Part 3 of this Act or ... (individuals: personal allowance and blind person's allowance).
See section 25 for further provision about the deduction of those allowances.
Step 4
Calculate tax at each applicable rate on the amounts of the components left after Step 3.
See Chapter 2 of this Part for the rates at which income tax is charged and the income charged at particular rates.
If the taxpayer is a trustee, see also Chapters 3 to 5 and 10 of Part 9 (special rules about settlements and trustees) for further provision about the income charged at particular rates.
See also section 863I of ITTOIA 2005 which provides for certain partnership profits to be charged at the additional rate.
Step 5
Add together the amounts of tax calculated at Step 4.
Step 6
Deduct from the amount of tax calculated at Step 5 any tax reductions to which the taxpayer is entitled for the tax year under a provision listed in relation to the taxpayer in section 26.
See sections 27 to 29 for further provision about the deduction of those tax reductions.
Step 7
Add to the amount of tax left after Step 6 any amounts of tax for which the taxpayer is liable for the tax year under any provision listed in relation to the taxpayer in section 30.
The result is the taxpayer's liability to income tax for the tax year.
(1) If the taxpayer is an individual, the provisions referred to at Step 2 of the calculation in section 23 are—
(a) the following—
section 72 (early trade losses relief),
Chapter 6 of Part 4 (share loss relief),
Chapter 3 of Part 8 (gifts of shares, securities and real property to charities etc),
sections 457 and 458 of this Act or section 266(7) of ICTA (payments to trade unions or police organisations),
section 41P of ITEPA 2003 (deduction for amount that reflects qualifying foreign employment income),
section 193(4) of FA 2004 (pension schemes: relief under net pay arrangement: excess relief), ...
section 194(1) of FA 2004 (pension schemes: relief on making of claim), and
section 845A of ITTOIA 2005 (claim for relief for qualifying new residents), and
(b) the following—
section 64 (trade loss relief against general income),
section 83 (carry-forward trade loss relief),
section 89 (terminal trade loss relief),
section 96 (post-cessation trade relief),
section 118 (carry-forward property loss relief),
section 120 (property loss relief against general income),
section 125 (post-cessation property relief),
section 128 (employment loss relief against general income),
section 152 (loss relief against miscellaneous income),
Chapter 1 of Part 8 (interest payments),
Chapter 1A of Part 8 (irrecoverable peer-to-peer loans),
Chapter 4 of Part 8 (annual payments ...),
section 574 (manufactured dividends on UK shares: payments by non-companies),
section 579 (manufactured interest on UK securities: payments not otherwise deductible),
Part 2 of CAA 2001 (plant and machinery allowances), in a case where the allowance is to be given effect under section 258 of that Act (special leasing of plant and machinery),
...
Part 8 of CAA 2001 (patent allowances), in a case where the allowance is to be given effect under section 479 of that Act (persons having qualifying non-trade expenditure),
section 555 of ITEPA 2003 (deduction for liabilities related to former employment),
section 446 of ITTOIA 2005 (strips of government securities: relief for losses),
section 454(4) of ITTOIA 2005 (listed securities held since 26 March 2003: relief for losses: persons other than trustees), and
section 600 of ITTOIA 2005 (relief for patent expenses).
(2) In any other case, the provisions referred to at Step 2 of the calculation in section 23 are—
(a) the provisions listed in subsection (1)(b), and
(b) regulation 18 of the Unauthorised Unit Trusts (Tax) Regulations 2013.
(1) If the taxpayer is an individual, there is a limit on certain deductions which may be made for the tax year at Step 2.
(2) The limit is determined as follows.
(3) Amount A must not exceed amount B.
(4) Amount A is—
(a) the deductions for the tax year at Step 2 for the reliefs listed in subsection (6) taken together, less
(b) so much of those deductions as fall within subsection (7).
(5) Amount B is—
(a) £50,000, or
(b) if more, 25% of the taxpayer's adjusted total income for the tax year (see subsection (8)).
(6) The reliefs are—
(a) relief under section 64 (trade loss relief against general income);
(b) relief under section 72 (early trade losses relief);
(c) relief under section 96 (post-cessation trade relief);
(d) relief under section 120 (property loss relief against general income);
(e) relief under section 125 (post-cessation property relief);
(f) relief under section 128 (employment loss relief against general income);
(g) relief under Chapter 6 of Part 4 (share loss relief);
(h) relief under Chapter 1 of Part 8 (interest payments);
(i) relief under section 555 of ITEPA 2003 (deduction for liabilities relating to former employment);
(j) relief under section 446 of ITTOIA 2005 (strips of government securities: relief for losses);
(k) relief under section 454(4) of ITTOIA 2005 (listed securities held since 26 March 2003: relief for losses: persons other than trustees).
(7) The deductions falling within this subsection are—
(a) deductions for amounts of relief so far as attributable to allowances under Part 3A of CAA 2001 (business premises renovation allowances);
(b) deductions for amounts of relief under a provision mentioned in subsection (6)(a) to (e) so far as made from profits of the trade or business to which the relief in question relates;
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) deductions for amounts of relief under the provision mentioned in subsection (6)(g)—
(i) where the shares in question fall within section 131(2)(a) (qualifying shares to which EIS relief is attributable), or
(ii) where SEIS relief is attributable to the shares in question as determined in accordance with Part 5A (seed enterprise investment scheme), or
(iii) where SI relief is attributable to the shares in question as determined in accordance with Part 5B (income tax relief for social investments).
(8) The taxpayer's “adjusted total income” for the tax year is calculated as follows.
Step 1 Take the amount of the taxpayer's total income for the tax year.
Step 2 Add back the amounts of any deductions allowed under Part 12 of ITEPA 2003 (payroll giving) in calculating the taxpayer's income which is charged to tax for the tax year.
Step 3 If the taxpayer is given relief in accordance with section 192 of FA 2004 (pension schemes: relief at source) in respect of any contribution paid in the tax year under a pension scheme, deduct the gross amount of the contribution. The “gross” amount of a contribution is the amount of the contribution before deduction of tax under section 192(1) of FA 2004.
Step 4 If the taxpayer is entitled to a deduction for relief under section 193(4) or 194(1) of FA 2004 (pension schemes: excess relief under net payment arrangements or relief on making a claim) for the tax year, deduct the amount of the excess or contribution (as the case may be). The result is the taxpayer's adjusted total income for the tax year.
24B Calculation of net income at Step 2 for low income estates and trusts
(1) Subsection (2) applies in relation to a taxpayer if—1
(a) they are the personal representative of a deceased person and, ignoring this section, their net income in that capacity at the end of Step 2 of the calculation in section 23 would be equal to or less than the de minimis estates amount, or
(b) they are the trustee of a settlement (“the relevant settlement”) and, ignoring this section, their net income in that capacity at the end of that Step would be equal to or less than the de minimis trusts amount.
(2) The taxpayer’s net income in their capacity as a personal representative of a deceased person or trustee of a settlement (as the case may be) at the end of Step 2 of the calculation in section 23 is taken to be £0.
(3) The de minimis estates amount is £500.
(4) The de minimis trusts amount is—
(a) £500, or
(b) in a case where subsection (5) applies, the higher of—
(i) £100, and
(ii) the settlor’s threshold amount.
(5) This subsection applies where—
(a) the settlor in relation to the relevant settlement is also the settlor in relation to one or more qualifying settlements,
(b) ignoring this section, the trust rate income (within the meaning of Part 9) for the tax year of the trustees of the relevant settlement would be greater than £0, and
(c) the relevant settlement is a settlement in respect of which each of the conditions mentioned in subsection (9) is met throughout the tax year.
(6) The settlor’s threshold amount is the amount given by—
£500QS+1
where QS is the total number of qualifying settlements.
(7) If there is more than one settlor in relation to the relevant settlement—
(a) calculate the threshold amount of each of them, and
(b) use the lowest of those threshold amounts for the purposes of subsection (4)(b)(ii).
(8) A settlement is a “qualifying settlement” if—
(a) it is not the relevant settlement,
(b) it is in existence at a time during the tax year,
(c) ignoring this section, the trust rate income (within the meaning of Part 9) for the tax year of the trustees of the settlement would be greater than £0, and
(d) it is a settlement in respect of which each of the conditions mentioned in subsection (9) is met throughout the tax year.
(9) The conditions are—
(a) the property comprised in the settlement is not held for a pensions purpose within the meaning of paragraph 7(3) of Schedule 1C to TCGA 1992 (property comprised in settlements held for a pensions purpose);
(b) no income arising under the settlement is treated as the income of the settlor as a result of section 624 of ITTOIA 2005 (income where settlor retains an interest);
(c) the settlement is not a qualifying trust within the meaning of section 34 or 35 of FA 2005 (trusts for the benefit of disabled persons or relevant minors);
(d) the settlement is not a heritage maintenance settlement within the meaning of Chapter 10 of Part 9 (heritage maintenance settlements) (see section 507(2) and (3)).
25 Reliefs and allowances deductible at Steps 2 and 3: supplementary
(1) This section supplements the provisions about reliefs and allowances in Steps 2 and 3 of the calculation in section 23.
(2) At Steps 2 and 3, deduct the reliefs and allowances in the way which will result in the greatest reduction in the taxpayer's liability to income tax.
(3) Subsection (2) is subject to—
section 65(2) to (4) (priority rule in relation to trade loss relief against general income),
section 80(2) (ring fence income),
section 83(3) and (4) (carry-forward trade loss relief against trade profits),
section 89(3) (terminal trade loss relief against trade profits),
section 93(2) (terminal trade loss relief and mineral extraction trade),
section 95(2) (foreign trades etc reliefs only against qualifying foreign income),
section 115(2) (restrictions on reliefs for firms exploiting films),
section 118(3) and (4) (carry-forward property loss relief against property business profits),
section 121(2) and (3) (priority rule in relation to property loss relief against general income),
section 129(2) to (4) (priority rule in relation to employment loss relief against general income),
section 133(4) (share loss relief against general income),
section 152(4) and (7) (loss relief against miscellaneous income),
sections 412A(4), 412B(3) and 412C(3) (relief for irrecoverable peer-to-peer loans only against interest on certain loans),
sections 574(3) to (8) and 575 (manufactured dividends on UK shares: restrictions on deductions),
section 579(2) to (5) and 580 (manufactured interest on UK securities: restrictions on deductions),
section 258 of CAA 2001 (special leasing of plant or machinery),
...
section 479 of that Act (persons having qualifying non-trade expenditure),
section 41P of ITEPA 2003 (qualifying foreign employment income),
section 601 of ITTOIA 2005 (how relief for patent expenses is given),
section 845A of ITTOIA 2005 (qualifying foreign income), and
any other provision of the Income Tax Acts under which reliefs or allowances deductible at Step 2 or 3 are not permitted to be deducted from particular components of income or are required to be deducted from particular components of income or in a different order.
(3A) Subsection (2) is also subject to a requirement that the reliefs and allowances in Steps 2 and 3 must be deducted from components of income other than property income, savings income or dividend income (so far as it would otherwise be possible to do so) before they are deducted from property income, savings income or dividend income.
(4) A relief or allowance may be deducted at Step 2 or 3 only so far as there is sufficient income from which to deduct it.
(5) In deciding whether there is sufficient income from which to deduct a relief or allowance, reliefs and allowances already deducted at Step 2 or 3 must be taken into account.
(6) Nothing in Step 2 or 3 is to be read as permitting a relief or allowance to be deducted more than once.
(1) If the taxpayer is an individual, the provisions referred to at Step 6 of the calculation in section 23 are—
(a) the following—
Chapter 3 of Part 3 of this Act ... (tax reductions for married couples and civil partners),
Chapter 3A of Part 3 of this Act (transferable tax allowance for married couples and civil partners),
Chapter 1 of Part 5 (EIS relief),
Chapter 1 of Part 5A (SEIS relief),
Chapter 1 of Part 5B (relief for social investments),
Chapter 2 of Part 6 (VCT relief),
Chapter 1 of Part 7 (community investment tax relief),
section 399B (relief for non-deductible interest on loan to invest in partnership with residential property business),
section 414A(3) (gift aid where devolved basic rate is above basic rate),
section 453 (qualifying maintenance payments),
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
section 461 (spreading of patent royalty receipts),
section 353(1A) of ICTA (relief for interest on loan to buy life annuity),
section 192A of FA 2004 (relief at source: additional relief),
section 274A of ITTOIA 2005 (property business: relief for non-deductible costs of a dwelling-related loan),
section 535 of ITTOIA 2005 (top slicing relief), and
section 539 of ITTOIA 2005 (relief for deficiencies), and
(b) the following—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
section 401 of ITTOIA 2005 (relief: distribution repaying shares or security issued in earlier distribution), ...
sections 677 and 678 of ITTOIA 2005 (relief where foreign estates have borne UK income tax).
sections 2 and 6 of TIOPA 2010 (double taxation relief: relief by agreement), and
section 18(1)(b) and (2) of TIOPA 2010 (relief for foreign tax where no double taxation arrangements).
(2) In any other case, the provisions referred to at Step 6 of the calculation in section 23 are—
(a) the provisions listed in subsection (1)(b),
(aa) section 274B of ITTOIA 2005 (trusts with accumulated or discretionary income derived from property business: relief for non-deductible costs of dwelling-related loans), and
(b) section 26 of FA 2005 (trusts with vulnerable beneficiary: income tax relief).
(1) This section makes provision about the order in which tax reductions are to be deducted at Step 6 of the calculation in section 23, if the taxpayer is an individual.
(2) Deduct the tax reductions in the order which will result in the greatest reduction in the taxpayer's liability to income tax for the tax year.
(3) Subsection (2) is subject to subsections (4) to (6).
(4) If the taxpayer is entitled to tax reductions for the tax year under more than one of the provisions listed in subsection (5), a tax reduction under a provision mentioned earlier in the list must be deducted before a tax reduction under a provision mentioned later in the list.
(5) The provisions are—
Chapter 2 of Part 6 (VCT relief),
Chapter 1 of Part 5 (EIS relief),
Chapter 1 of Part 5A (SEIS relief),
Chapter 1 of Part 5B (relief for social investments),
Chapter 1 of Part 7 (community investment tax relief),
section 353(1A) of ICTA (relief for interest on loan to buy life annuity),
section 453 (qualifying maintenance payments),
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter 3 of Part 3 of this Act ... (tax reductions for married couples and civil partners).
(6) If the taxpayer is entitled to a tax reduction under—
(a) sections 2 and 6 of TIOPA 2010 (double taxation arrangements: relief by agreement), or
(b) section 18(1)(b) and (2) of TIOPA 2010 (relief for foreign tax where no double taxation arrangements),
that tax reduction must be deducted after any other tax reduction to which the taxpayer is entitled for the tax year.
28 Order of deducting tax reductions: other persons
(1) This section makes provision about the order in which tax reductions are to be deducted at Step 6 of the calculation in section 23, if the taxpayer is a person other than an individual.
(2) Deduct the tax reductions in the order which will result in the greatest reduction in the taxpayer's liability to income tax for the tax year.
(3) Subsection (2) is subject to subsections (4) and (5).
(4) If the taxpayer is entitled to a tax reduction under—
(a) sections 2 and 6 of TIOPA 2010 (double taxation arrangements: relief by agreement), or
(b) section 18(1)(b) and (2) of TIOPA 2010 (relief for foreign tax where no double taxation arrangements),
that tax reduction must be deducted after any other tax reduction to which the taxpayer is entitled for the tax year, subject to subsection (5).
(5) If the taxpayer is a trustee and is entitled to a tax reduction under section 26 of FA 2005 (trusts with vulnerable beneficiary: income tax relief) that tax reduction must be deducted after any other tax reduction to which the taxpayer is entitled for the tax year.
(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) sections 36(1) to (5) and (7) and 41 of TIOPA 2010 (limits on credit for foreign tax), and
(b) any other provision of the Income Tax Acts that limits the amount of a tax reduction.
(4A) If the taxpayer is an individual, the total of the tax reductions within subsection (4B) that are deducted at Step 6 must not be greater than—
A − B
where—
A is the amount of tax calculated at Step 5, and
B is the total amount of the tax treated under section 414 (gift aid) as deducted from gifts made by the taxpayer in the tax year.
(4B) A tax reduction is within this subsection if it is under—
Chapter 1 of Part 5 (EIS relief),
Chapter 1 of Part 5A (SEIS relief),
Chapter 1 of Part 5B (relief for social investments),
Chapter 2 of Part 6 (VCT relief), or
Chapter 1 of Part 7 (community investment tax relief).
(4C) Subsection (4A) applies in addition to subsections (2) and (3).
(5) For the purposes of this Chapter, a person is treated as being entitled to a tax reduction under sections 2 and 6 of TIOPA 2010 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 414A(4) read with section 414A(5) (gift aid where devolved basic rate is below basic rate),
section 424 (gift aid: charge to tax),
section 809ZMA (tainted donations: clawback where tainting occurs in later year),
section 809ZMB (tainted donations: associated donations)
section 809ZN (tainted gift aid donations: charge to tax),
section 809ZO (tainted charity donations by trustees: charge to tax),
Chapter 8 of Part 10 of ITEPA 2003 (high income child benefit charge),
Chapter 9 of Part 10 of ITEPA 2003 (winter fuel payment charge),
section 192B of FA 2004 (relief at source: excessive relief given),
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 of FA 2004 (pension schemes: the unauthorised payments charge),
section 209 of FA 2004 (pension schemes: the unauthorised payments surcharge),
...
section 227 of FA 2004 (pension schemes: the annual allowance charge), and
section 244A of FA 2004 (pension schemes: the overseas transfer charge),
section 7 of F(No.2)A 2005 (social security pension lump sum).
(2) If the taxpayer is a trustee, the provisions referred to at Step 7 of the calculation in section 23 are—
section 496 (discretionary payments by trustees: tax pool adjustment),
section 809ZMA (tainted donations: clawback where tainting occurs in later year),
section 809ZMB (tainted donations: associated donations)
section 809ZN (tainted gift aid donations: charge to tax), and
section 809ZO (tainted charity donations by trustees: charge to tax).
(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 rate , the property basic rate, the savings basic rate, the Welsh basic rate or the Scottish basic rate ... in force for a tax year is treated as income of that tax year.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Subsection (2) applies 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 74C(5) (non-active traders: withdrawal of relief),
under section 79(1) (capital allowances restrictions: withdrawal of relief),
under section 81(6) (dealings in commodity futures: withdrawal of relief),
under section 103B(5) (non-active partners: withdrawal of relief),
under section 235 (withdrawal or reduction of EIS relief),
under section 257G (withdrawal or reduction of SEIS relief),
under section 257S (withdrawal or reduction of relief for social investments),
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 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), ...
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, and
under section 24(4) of TIOPA 2010 (recovery of excess credit for overseas tax).
(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 where a party to the marriage or civil partnership is born before 6 April 1935.
(3A) Chapter 3A provides for a transferable tax allowance for married couples and civil partners.
(4) Chapter 4 contains provision applicable for the purposes of Chapters 2 , 3 and 3A, in particular—
(a) requirements about residence etc of claimants to allowances under Chapter 2 or tax reductions under Chapter 3 or 3A, and
(b) indexation of the amounts of the allowances under Chapter 2 and tax reductions under Chapter 3.
(1) In this Chapter—
(a) section 35 deals 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.
(3) See also—
(a) section 809G, in relation to tax years before 2025-26 where a claim for the remittance basis to apply is made, and
(b) section 845E of ITTIOA 2005, in relation to tax years from 2025-26 where a foreign income claim, a foreign employment election or a foreign gain claim is made.
Those sections provide that where an individual makes such a claim or election for a tax year, the individual is not entitled to any allowance under this Chapter for that tax year.
(1) An individual who makes a claim is entitled to a personal allowance of £12,570 for a tax year if the individual meets the requirements of section 56 (residence etc).
(2) For an individual whose adjusted net income exceeds £100,000, the allowance under subsection (1) is reduced by one-half of the excess.
(3) If the amount of any allowance that remains after the operation of subsection (2) would otherwise not be a multiple of £1, it is to be rounded up to the nearest amount which is a multiple of £1.
(4) For the meaning of “adjusted net income” see section 58.
37 Personal allowance for those born before 6 April 1938
(1) An individual who makes a claim is entitled to a personal allowance of £10,660, or (if greater) the section 35 amount, for a tax year if the individual—
(a) was born before 6 April 1938, and
(b) meets the requirements of section 56 (residence etc).
(2) If the allowance under subsection (1) is greater than the section 35 amount, for an individual whose adjusted net income for the tax year exceeds £27,700, the allowance under subsection (1)—
(a) is reduced by an amount equal to half of that excess income, but
(b) is not reduced below the section 35 amount.
(2A) In this section “the section 35 amount” means the amount of any allowance to which the individual would be entitled under section 35 for the tax year if the individual had been born after 5 April 1948.
(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 £3,250 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—
(a) registered as a severely sight-impaired adult in a register kept under section 77(1) of the Care Act 2014 (registers kept by local authorities in England), or
(b) registered as a severely sight-impaired adult in a register kept under section 18(1) of the Social Services and Well-being (Wales) Act 2014 (registers kept by local authorities in 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 or as a severely sight-impaired person in a register kept under section 77(1) of the Care Act 2014 or section 18(1) of the Social Services and Well-being (Wales) Act 2014 in the tax year, but
(b) obtained the evidence of blindness or of severe sight-impairment 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.
39 Transfer of part of blind person's allowance to a spouse or civil partner
(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.
40 Election for transfer of allowance under section 39
(1) An election under section 39—
(a) must be made not more than 4 years after the end of 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) 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.
For the purposes of this Chapter, a civil partnership between two people results from a relevant conversion if—
(a) the civil partnership results from—
(i) the conversion of their marriage into a civil partnership under Part 3 of the Marriage and Civil Partnership (Northern Ireland) (No. 2) Regulations 2020, or
(ii) the conversion of their marriage into a civil partnership under Part 4 or 5 of those Regulations, and
(b) the marriage took place before 5 December 2005.
(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 , or by the civil partners in a civil partnership which results from a relevant conversion, 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 or civil partnership,
(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) or the conditions set out in subsection (2A),
he is entitled to a tax reduction for the tax year of 10% of the amount specified in subsection (3)(a) ... .
(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).
(2A) The conditions are that—
(a) for the whole or part of the tax year he is in a civil partnership and his female civil partner is living with him,
(b) the civil partnership results from a relevant conversion and no election for the new rules to apply is in force for the tax year,
(c) he or his civil partner was born before 6 April 1935, and
(d) he meets the requirements of section 56 (residence etc).
(3) The amount is—
(a) £11,700 if either the man or his wife or civil partner is aged 75 or over at some time in the tax year ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) For a man whose adjusted net income for the tax year exceeds £39,200, the amounts specified in subsection (3) are reduced by half the excess.
(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.
46 Marriages and civil partnerships on or after 5 December 2005
(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) ....
(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 or if the civil partnership results from a relevant conversion, 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) £11,700, if either the individual, or the spouse or civil partner, is aged 75 or over at some time in the tax year ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) For an individual whose adjusted net income for the tax year exceeds £39,200, the amounts specified in subsection (3) are reduced by half the excess.
(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 not more than 4 years after the end of the tax year to which the election relates.
(7) For the meaning of “adjusted net income” see section 58.
47 Election by individual to transfer relief under section 45 or 46
(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 or civil partner is entitled to a tax reduction under section 45, the amount specified in section 45(3)(a) ... , 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) ... , after any reductions under sections 46(4) and 54(2).
48 Joint election to transfer relief under section 45 or 46
(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 or civil partner is entitled to a tax reduction under section 45, the amount specified in section 45(3)(a) ... , 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) ... , 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).
50 Procedure for making and withdrawing elections under sections 47 to 49
(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.
(1) For the purposes of sections 51 and 52, the comparable tax liability of an individual is the amount of the individual's tax left after Step 6 of the calculation in section 23 for the tax year, making that calculation with the modifications set out in subsections (2) and (3).
(2) In making that calculation, do not deduct any tax reduction under—
(a) sections 2 and 6 of TIOPA 2010 (double taxation arrangements: relief by agreement), or
(b) section 18(1)(b) and (2) of TIOPA 2010 (relief for foreign tax where there are no double taxation arrangements).
(3) If the individual's entitlement to a tax reduction under this Chapter is extinguished under section 423(4) (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (1) and (2) the amount by which the tax reduction is reduced.
(4) A notice under section 51 or 52—
(a) must be given not more than 4 years after the end of the tax year to which it relates,
(b) must be in the form specified by the Commissioners for Her Majesty's Revenue and Customs, and
(c) cannot be withdrawn.
(5) For the purposes of this section a person is treated as being entitled to a tax reduction under sections 2 and 6 of TIOPA 2010 if the person is entitled to credit against income tax under double taxation arrangements.
54 Tax reductions in the year of marriage or entry into civil partnership
(1) Subsection (2) applies if an individual—
(a) gets married or enters into a civil partnership in a tax year, and
(b) claims a tax reduction under section 45 or 46 for that tax year.
(2) In calculating the amount of the tax reduction (if any) to which the individual is entitled under that section, the amounts specified in section 45(3) or 46(3) (as applicable) are reduced by one twelfth for each month of the tax year which is a month ending before the date on which—
(a) the marriage took place, or
(b) the civil partnership was formed.
(3) The reference in subsection (2) to the amounts specified in section 45(3) or 46(3) is to those amounts after any reduction under section 45(4) or 46(4).
(4) But if—
(a) the individual has previously been married or in a civil partnership in the same tax year, and
(b) the conditions in section 45(2) or (2A) or 46(2) are met in relation to the earlier marriage or civil partnership,
subsection (2) applies only if the claim is in respect of the later marriage or civil partnership.
(5) If a claim under section 47, 48 or 49 is for the tax year in which the marriage takes place, or the civil partnership is formed, the references in those sections to the minimum amount are to be read as references to the minimum amount reduced by one twelfth for each month of the tax year which is a month ending before the date on which—
(a) the marriage took place, or
(b) the civil partnership was formed.
(6) In this section, “month” means a period beginning with the sixth day of a calendar month and ending with the fifth day of the next calendar month.
(1) An individual is not entitled to more than one tax reduction under sections 45 to 48 for a tax year (regardless of whether the individual is a party to more than one marriage or civil partnership in the tax year).
(2) For the purposes of sections 45 and 46 an individual is treated as having reached the age of 75 in a tax year if the individual was due to reach the age of 75 in the tax year, but dies in the tax year before reaching that age.
(3) Unless this Chapter provides otherwise, a tax reduction to which an individual is entitled under this Chapter for a tax year, including the tax year in which the individual dies, is given in full.
(1) This Chapter contains provisions about the entitlement of a spouse or civil partner to a tax reduction in a case where the other party to the marriage or civil partnership has elected for a reduced personal allowance.
(2) A tax reduction under this Chapter is given effect at Step 6 of the calculation in section 23.
(3) See also—
(a) section 809G, in relation to tax years before 2025-26 where a claim for the remittance basis to apply is made, and
(b) section 845E of ITTIOA 2005, in relation to tax years from 2025-26 where a foreign income claim, a foreign employment election or a foreign gain claim is made.
Those sections provide that where an individual makes such a claim or election for a tax year, the individual is not entitled to any tax reduction under this Chapter for that tax year.
(1) An individual is entitled to a tax reduction for a tax year of the appropriate percentage of the transferable amount if the conditions in subsection (2) are met.
(2) The conditions are that—
(a) the individual is the gaining party (see section 55C(1)(a)) in the case of an election under section 55C which is in force for the tax year,
(b) the individual is not, for the tax year, liable to tax at a rate other than the basic rate, the property basic rate, the default basic rate, the savings basic rate, the dividend nil rate, the Scottish basic rate, a Scottish rate below the Scottish basic rate, the Scottish intermediate rate, the Welsh basic rate, the Welsh property basic rate, the dividend ordinary rate , the savings nil rate or the starting rate for savings,
(ba) if for the tax year the individual is liable to tax at the dividend nil rate, the individual would for that year neither be liable to tax at the dividend upper rate, nor be liable to tax at the dividend additional rate, if section 13A (dividend nil rate) were omitted,
(c) the individual meets the requirements of section 56 (residence) for the tax year, and
(d) neither the individual nor the relinquishing spouse or civil partner makes a claim for the tax year under section 45 (married couple's allowance: marriages before 5 December 2005) or section 46 (married couple's allowance: marriages and civil partnerships on or after 5 December 2005).
(3) “The appropriate percentage” is the basic rate or default basic rate or, in the case of a Scottish taxpayer or Welsh taxpayer, the Scottish basic rate or Welsh basic rate at which the individual would be charged to income tax for the tax year to which the reduction relates.
(4) “The transferable amount”—
(a) for the tax year 2015-16, is £1,060, and
(b) for the tax year 2016-17 and subsequent tax years, is 10% of the amount of personal allowance specified in section 35(1) for the tax year to which the reduction relates.
(5) If the transferable amount calculated in accordance with subsection (4)(b) would otherwise not be a multiple of £10, it is to be rounded up to the nearest amount which is a multiple of £10.
(5A) In this section “the relinquishing spouse or civil partner”, in relation to an election under section 55C, means the individual mentioned in section 55C(1)(a) by whom, or by whose personal representatives, the election is made.
(6) If an individual is entitled to a tax reduction under subsection (1) by reference to an election under section 55C, the personal allowance to which the relinquishing spouse or civil partner is entitled under section 35 ... is reduced for the tax year by the transferable amount.
(7) If an individual who is entitled to a tax reduction for a tax year under subsection (1) dies during that tax year, subsection (6) is to be ignored (but this does not affect the individual's entitlement to the tax reduction).