Finance Act 2010 Explanatory Notes

New section 213D Relevant Income

12.New section 213D(1) sets out how to calculate the individual’s “relevant income” for the tax year. The amount of relevant income is:

  • the total income of the individual for the tax year (Step 1);

  • plus any pension contributions and donations under payroll giving paid by the individual in respect of which there was a deduction in determining total income at Step 1 above (Step 2);

  • less any income tax deductions and reliefs, other than for pension contributions and gifts of qualifying investments to charity, that are deductible at Step 2 of the calculation of income tax liability in section 24 of ITA (Step 3);

  • plus taxable employment income that the individual has agreed to give up under a salary sacrifice or flexible remuneration arrangement made on or after 22 April 2009 (Step 4).

13.New section 213D(2) defines when a ‘relevant’ salary sacrifice or flexible remuneration arrangement made on or after 22 April 2009 exists, for the purposes of Step 4 of the relevant income calculation.

14.New section 213D(3) defines relevant pension provision (as used in the meanings of relevant salary sacrifice and flexible remuneration arrangements) by reference to pension contributions to a pension scheme in respect of the individual .

15.New section 213D(4) defines a connected person by reference to the definition in section 993 of ITA.

Back to top