Income and Corporation Taxes Act 1988

835 “Total income” in the Income Tax Acts. U.K.

M1 (1) In the Income Tax Acts “total income”, in relation to any person, means the total income of that person from all sources estimated in accordance with the provisions of the Income Tax Acts.

(2) Any person who, on his own behalf or on behalf of another person, delivers a statement of the amount of his or that other person’s total income shall observe the rules and directions contained in section 836.

(3) M2 Where deductions reduce a person’s total income and the order in which they are made or in which income of different descriptions is reduced thereby may affect his liability to income tax the deductions shall be made and treated as reducing income in accordance with subsections (4) and (5) below.

(4) Subject to any express provisions of the Income Tax Acts, any deductions allowable in computing a person’s total income or to be made from a person’s total income shall be treated as reducing income of different descriptions in the order which will result in the greatest reduction of his liability to income tax.

(5) Deductions from total income under Chapter I of Part VII shall be made after any other deductions and shall not affect the amount to be taken as a person’s total income for the purposes of section 257(5) [F1 , 257A(5)] or 274nor the amount determining whether a person is entitled to relief under section 263or by how much relief under that section is reducedF2 .

(6) M3 In estimating the total income of any person—

(a) any income which is chargeable with income tax by way of deduction at the basic rate in force for any year or which for the purposes of Schedule F comprises an amount equal to a tax credit calculated by reference to the rate of advance corporation tax in force for any year shall be deemed to be income of that year; and

(b) any deductions which are allowable on account of sums payable under deduction of income tax at the basic rate in force for any year out of the property or profits of that person shall be allowed as deductions in respect of that year;

notwithstanding that the income or sums, as the case may be, accrued or will accrue in whole or in part before or after that year.

(7) Where an assessment has become final and conclusive for the purposes of income tax for any year of assessment—

(a) that assessment shall also be final and conclusive in estimating total income; and

(b) no allowance or adjustment of liability, on the ground of diminution of income or loss, shall be taken into account in estimating total income unless that allowance or adjustment has previously been made on an application under the special provisions of the Income Tax Acts relating thereto.

(8) Subsection (7) above shall apply in relation to—

(a) any relief under section 353;

(b) any relief by reason of the operation of an election for the herd basis under Schedule 5; and

(c) any allowance under [F3 Parts I to VI of the 1990 Act] to be given by way of discharge or repayment of tax and to be available or available primarily against a specified class of income (that is to say, any capital allowance to which section [F4 141 of the 1990 Act] applies, or as provided by section 532 of this Act, any capital allowance to which section 528(2) of this Act applies);

as it applies in relation to allowances or adjustments on the ground of diminution of income or loss.

Textual Amendments

F1 1988(F) s.35 Sch.3 para.22for 1990-91and subsequent years.

F2 Repealed by 1988(F) s.148and Sch.14 Part IVfor 1988-89and subsequent years.

F3 1990(C) s.164and Sch.1 para.8(38)(a).Previously

“Part I of the 1968 Act or Chapter I of Part III of the Finance Act 1971”.

F4 1990(C) s.164and Sch.1 para.8(38)(b).Previously

“71 of the 1968 Act”.

Marginal Citations

M1 Source—1970 s.528(1), (2); 1971 Sch.6 78; 1972 Sch.24 32.

M2 Source—1971 s.34; 1975 (No.2) s.31(4)

M3 Source—1970 s.528(3)(5); 1972 Sch.11 8, Sch.24 32; 1971 Sch.6 78