Income and Corporation Taxes Act 1988

623 Relevant earnings. U.K.

F1 (1) M1 For the purposes of this Chapter, a married woman’s relevant earnings shall not be treated as her husband’s relevant earnings, notwithstanding that her income chargeable to tax is treated as his income .

(2) F1 Subject to subsection (1)above , “relevant earnings”, in relation to any individual, means, for the purposes of this Chapter, any income of his chargeable to tax for the year of assessment in question, being either—

(a) income arising in respect of remuneration from an office or employment held by him other than a pensionable office or employment; or

(b) income from any property which is attached to or forms part of the emoluments of any such office or employment held by him; or

(c) income which is chargeable under F2 Schedule B or[F3 Part 2 of ITTOIA 2005] and is immediately derived by him from the carrying on or exercise by him of his trade, profession or vocation either as an individual or, in the case of a partnership, as a partner personally acting therein; or

[F4 (d) income to which section 833(5B) (patent income) applies;]

but does not include any remuneration as director of a company whose income consists wholly or mainly of investment income [F5 (that is to say, income which, if the company were an individual, would not be earned income)], being a company of which he is a controlling director.

(3) For the purposes of this Chapter, an office or employment is a pensionable office or employment if, and only if, service in it is service to which a sponsored superannuation scheme relates (not being a scheme under which the benefits provided in respect of that service are limited to a lump sum payable on the termination of the service through death or disability before the age of 75 or some lower age); but references to a pensionable office or employment apply whether or not the duties are performed wholly or partly in the United Kingdom or the holder is chargeable to tax in respect of it.

(4) Service in an office or employment shall not for the purposes of subsection (3) above be treated as service to which a sponsored superannuation scheme relates by reason only of the fact that the holder of the office or employment might (though he does not) participate in the scheme by exercising or refraining from exercising an option open to him by virtue of that service.

(5) M2 For the purposes of relief under section 619, an individual’s relevant earnings are those earnings before giving effect to any capital allowances, other than deductions allowable in computing profits or gains, but after taking into account the amounts on which charges fall to be made under [F6 the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act)]; and references to income in the following provisions of this section (other than references to total income) shall be construed similarly.

(6) Subject to the following provisions of this section “net relevant earnings” means, in relation to an individual, the amount of his relevant earnings for the year of assessment in question, less the amount of any deductions falling to be made from the relevant earnings in computing for the purposes of income tax his total income for that year, being—

(a) deductions which but for [F7 section 51 of ITTOIA 2005] could be made in computing his profits or gains; or

[F8 (aa) deductions in respect of any annuity or other annual payment (other than interest) payable out of his profits; or]

(b) deductions in respect of relief under Schedule 9 of the Finance Act 1981 (stock relief); or

(c) deductions in respect of losses or capital allowances arising from activities profits or gains of which would be included in computing relevant earnings of the individual F9 or of the individual’s wife or husband.

(7) Where in any year of assessment for which an individual claims and is allowed relief under section 619—

(a) there falls to be made in computing the total income of the individual F10 or that of his wife or her husband a deduction in respect of any such loss or allowance of the individual as is mentioned in subsection (6)(c) above; and

(b) the deduction or part of it falls to be so made from income other than relevant earnings,

the amount of the deduction made from that other income shall be treated as reducing the individual’s net relevant earnings for subsequent years of assessment (being deducted as far as may be from those of the immediately following year, whether or not he claims or is entitled to claim relief under this section for that year, and so far as it cannot be so deducted, then from those of the next year, and so on).

(8) M3 An individual’s net relevant earnings for any year of assessment are to be computed without regard to any relief which falls to be given for that year under section 619 F10 either to that individual F10 or to that individual’s wife or husband.

(9) An individual’s relevant earnings, in the case of partnership profits, shall be taken to be his share of the partnership income, estimated in accordance with the Income Tax Acts, but the amount to be included in respect of those earnings in arriving at his net relevant earnings shall be his share of that income after making therefrom all such deductions (if any) in respect of payments made by the partnership or of relief given to the partnership under Schedule 9 of the Finance Act 1981 (stock relief) or in respect of capital allowances falling to be made to the partnership as would be made in computing the tax payable in respect of that income.

Textual Amendments

F1 S. 623(1) and words in s. 623(2) repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

F2 Words in s. 623(2)(c) repealed by 1988(F) s.148and Sch.14 Part Vfrom 6April 1988.

F3 Words in s. 623(2)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 263(2)(a) (with Sch. 2)

F4 S. 623(2)(d) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 263(2)(b) (with Sch. 2)

F5 1989 s.107and Sch.12 para.15—in relation to accounting periods beginning after 31March 1989.Previously

“(construed in accordance with paragraph 7 of Schedule 19)”.

F6 Words in s. 623(5) substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 53

F7 Words in s. 623(6)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 263(3)(a) (with Sch. 2)

F8 S. 623(6)(aa) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 263(3)(b) (with Sch. 2)

F9 Words in s. 623(6)(c) repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

F10 Words in s. 623(7)(a)(8) repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

Modifications etc. (not altering text)

C1 S. 623(2)(c) extended (with effect in accordance with s. 44 of the extending Act) by Finance Act 1998 (c. 36), Sch. 6 paras. 1, 2

C2 S. 623(2)(c) extended (with effect in accordance with Sch. 22 paras. 16-18 of the extending Act) by Finance Act 2002 (c. 23), Sch. 22 para. 4

Marginal Citations

M1 Source-1970 s.226(8)-(10); 1976 s.30(2); 1972 Sch.24 17

M2 Source-1970 s.227(4), (5)(a), (aa), (b), (6); 1971 Sch.8 16; 1970 s.33(3); 1981 s.35; 1986 s.56(7), Sch.13 2

M3 Source-1970 s.227(8), (9); 1980 s.33(4); 1981 s.35