Income Tax Act 2007

Part 3 U.K. Personal reliefs

Chapter 1 U.K. Introduction

33 Overview of Part U.K.

(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 [F1 where a party to the marriage or civil partnership is born before 6 April 1935].

[F2 (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 [F3 , 3 and 3A], in particular—

(a) requirements about residence etc of claimants to allowances under Chapter 2 or tax reductions under Chapter 3 [F4 or 3A], and

(b) indexation of the amounts of [F5 the allowances under Chapter 2 and tax reductions under Chapter 3].

Textual Amendments

F1 Words in s. 33(3) inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(5)(a)

F2 S. 33(3A) inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(5)(b)

F3 Words in s. 33(4) substituted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(5)(c)

F4 Words in s. 33(4)(a) inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(5)(d)

F5 Words in s. 33(4)(b) substituted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(5)(e)

Chapter 2 U.K. Personal allowance and blind person's allowance

Introduction U.K.

34 Allowances under Chapter U.K.

(1) In this Chapter—

(a) [F6 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.

[F7 (3) For the effect of section 809B (claim for remittance basis to apply) applying to an individual for a tax year, see section 809G (no entitlement to personal allowance or blind person's allowance).]

Textual Amendments

F6 Words in s. 34(1)(a) substituted (with effect in accordance with s. 5(11) of the amending Act) by Finance Act 2015 (c. 11), s. 5(3)

F7 S. 34(3) inserted (21.7.2008 with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 76

Personal allowances U.K.

35 [F8 Personal allowance] U.K.

[F9 (1)] An individual who makes a claim is entitled to a personal allowance of [F10 £10,800] [F11 £11,000] for a tax year if the individual [F12 meets the requirements of section 56 (residence etc).]

[F13 (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.]

Textual Amendments

F8 S. 35 heading substituted (with effect in accordance with s. 5(11) of the amending Act) by Finance Act 2015 (c. 11), s. 5(4)(b)

F9 S. 35(1) renumbered (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2009 (c. 10), s. 4(1)

F10 Sum in s. 35(1) substituted (26.3.2015 for the tax year 2016-17) by Finance Act 2015 (c. 11), s. 5(1)(a)

F11 Sum in s. 35(1) substituted (26.3.2015 for the tax year 2017-18) by Finance Act 2015 (c. 11), s. 5(1)(b)

F12 Words in s. 35 substituted for s. 35(a)(b) (with effect in accordance with s. 5(11) of the amending Act) by Finance Act 2015 (c. 11), s. 5(4)(a)

F13 S. 35(2)-(4) inserted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2009 (c. 10), s. 4(1)

F15 36 Personal allowance for those [F14 born after 5 April 1938 but before 6 April 1948] U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F14 Words in s. 36 heading substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(3)(d)

F15 S. 36 omitted (with effect in accordance with s. 2(9) of the amending Act) by virtue of Finance Act 2014 (c. 26), s. 2(5)

37 Personal allowance for those [F16 born before 6 April 1938] U.K.

[F17 [F18 (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) [F19 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 [F20 £27,700], the allowance under subsection (1)—

(a) is reduced by [F21 an amount equal to half of that excess income], but

(b) is not reduced below [F22 the [F23 section 35 amount].]

[F24 (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.]

Textual Amendments

F16 Words in s. 37 heading substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(4)(d)

F17 S. 37 omitted (26.3.2015 for the tax year 2016-17 and subsequent tax years) by virtue of Finance Act 2015 (c. 11), s. 5(5)(11)

F18 S. 37(1) substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(4)(a)

F19 Words in s. 37(2) substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(4)(b)(i)

F20 Sum in s. 37(2) substituted (26.3.2015 for the tax year 2015-16) by Finance Act 2015 (c. 11), s. 2(1)(a)

F21 Words in s. 37(2)(a) substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(4)(b)(ii)

F22 Words in s. 37(2)(b) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2009 (c. 10), s. 4(2)

F23 Words in s. 37(2)(b) substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(4)(b)(iii)

F24 S. 37(2A) inserted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(4)(c)

Blind person's allowance U.K.

38 Blind person's allowance U.K.

(1) An individual who makes a claim is entitled to a blind person's allowance of [F25 £2,290] 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.

Textual Amendments

F25 Sum in s. 38(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 2(1)(b)

39 Transfer of part of blind person's allowance to a spouse or civil partner U.K.

(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 U.K.

(1) An election under section 39—

(a) must be made [F26 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.

Textual Amendments

F26 Words in s. 40(1)(a) substituted (1.4.2010) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 55; S.I. 2009/403, art. 2(2) (with art. 10)

Supplementary U.K.

41 Allowances in year of death U.K.

(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.

F27 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F28 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F27 S. 41(2) omitted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by virtue of Finance Act 2012 (c. 14), s. 4(5)

F28 S. 41(3) omitted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by virtue of Finance Act 2012 (c. 14), s. 4(5)

Chapter 3 U.K. Tax reductions for married couples and civil partners[F29 : persons born before 6 April 1935]

Textual Amendments

F29 Words in Pt. 3 Ch. 3 heading inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(6)

Introduction U.K.

42 Tax reductions under Chapter U.K.

(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.

43 Meaning of “the minimum amount” U.K.

In this Chapter “the minimum amount” means [F30 £3,220].

Textual Amendments

F30 Sum in s. 43 substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 2(1)(c)

44 Election for new rules to apply U.K.

(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.

Married couple's allowance U.K.

45 Marriages before 5 December 2005 U.K.

(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) F31 ... .

(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) [F32 £8,355], if either the man or his wife is aged 75 or over at some time in the tax year F33 ...

F33 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) For a man whose adjusted net income for the tax year exceeds [F34 £27,700], the amounts specified in subsection (3) are reduced by [F35 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.

Textual Amendments

F31 Words in s. 45(1) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F32 Sum in s. 45(3)(a) substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 2(1)(d)

F33 Words in s. 45(3) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F34 Sum in s. 45(4) substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 2(1)(e)

F35 Words in s. 45(4) substituted for s. 45(4)(a)(b) (with effect in accordance with s. 5(11) of the amending Act) by Finance Act 2015 (c. 11), s. 5(6)

46 Marriages and civil partnerships on or after 5 December 2005 U.K.

(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) F36 ....

(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) [F37 £8,355], if either the individual, or the spouse or civil partner, is aged 75 or over at some time in the tax year F38 ...

F38 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) For an individual whose adjusted net income for the tax year exceeds [F39 £27,700], the amounts specified in subsection (3) are reduced by [F40 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 [F41 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.

Textual Amendments

F36 Words in s. 46(1) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F37 Sum in s. 46(3)(a) substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 2(1)(f)

F38 Words in s. 46(3) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F39 Sum in s. 46(4) substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 2(1)(g)

F40 Words in s. 46(4) substituted for s. 46(4)(a)(b) (with effect in accordance with s. 5(11) of the amending Act) by Finance Act 2015 (c. 11), s. 5(7)

F41 Words in s. 46(6)(b) substituted (1.4.2010) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 56; S.I. 2009/403, art. 2(2) (with art. 10)

Elections to transfer relief U.K.

47 Election by individual to transfer relief under section 45 or 46 U.K.

(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) F42 ... , 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) F42 ... , after any reductions under sections 46(4) and 54(2).

Textual Amendments

F42 Words in s. 47(4) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

48 Joint election to transfer relief under section 45 or 46 U.K.

(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) F43 ... , 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) F43 ... , after any reductions under sections 46(4) and 54(2).

Textual Amendments

F43 Words in s. 48(4) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

49 Election for partial transfer back of relief U.K.

(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 U.K.

(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.

Transfer of unused relief U.K.

51 Transfer of unused relief U.K.

(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.

52 Transfer back of unused relief U.K.

(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.

53 Transfer of unused relief: general U.K.

(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) [F44 sections 2 and 6 of TIOPA 2010] (double taxation arrangements: relief by agreement), or

(b) [F45 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 [F46 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 [F47 sections 2 and 6 of TIOPA 2010] if the person is entitled to credit against income tax under double taxation arrangements.

Textual Amendments

F44 Words in s. 53(2)(a) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 78(2)(a) (with Sch. 9 paras. 1-9, 22)

F45 Words in s. 53(2)(b) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 78(2)(b) (with Sch. 9 paras. 1-9, 22)

F46 Words in s. 53(4)(a) substituted (1.4.2010) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 57; S.I. 2009/403, art. 2(2) (with art. 10)

F47 Words in s. 53(5) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 78(3) (with Sch. 9 paras. 1-9, 22)

Supplementary U.K.

54 Tax reductions in the year of marriage or entry into civil partnership U.K.

(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 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.

55 Sections 45 to 53: supplementary U.K.

(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.

[F48 CHAPTER 3A U.K. Transferable tax allowance for married couples and civil partners

Textual Amendments

F48 Pt. 3 Ch. 3A inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(2)

Introduction U.K.

55A Tax reduction under Chapter U.K.

(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) For the effect of section 809B (claim for remittance basis to apply) applying to an individual for a tax year, see section 809G (no entitlement to tax reduction).

Tax reduction U.K.

55B Tax reduction: entitlement U.K.

(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 married to, or in a civil partnership with, a person who makes an election under section 55C for the purposes of this section which is in force for the tax year (“the individual's spouse or civil partner”),

(b) the individual is not, for the tax year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings,

(c) the individual meets the requirements of section 56 (residence) for the tax year, and

(d) neither the individual nor the individual's 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 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 [F49 £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.

(6) If an individual is entitled to a tax reduction under subsection (1), the personal allowance to which the individual's spouse or civil partner is entitled under section 35 F50 ... 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).

Textual Amendments

F49 Sum in s. 55B(4)(a) substituted (with effect in accordance with s. 3(5) of the amending Act) by Finance Act 2015 (c. 11), s. 3(4)

F50 Words in s. 55B(6) omitted (with effect in accordance with s. 5(11) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 5(8)

Election to reduce personal allowance U.K.

55C Election to reduce personal allowance U.K.

(1) An individual may make an election for the purposes of section 55B if—

(a) the individual is married to, or in a civil partnership with, the same person—

(i) for the whole or part of the tax year concerned, and

(ii) when the election is made,

(b) the individual is entitled to a personal allowance under section 35 F51 ... for that tax year,

(c) assuming the individual's personal allowance was reduced as set out in section 55B(6), the individual would not for that year be liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings, and

(d) where the individual meets the requirements of section 56 (residence) for the tax year by reason of meeting the condition in subsection (3) of that section, the individual meets the condition in subsection (2) of this section.

(2) The condition is that the individual's hypothetical net income for the tax year concerned is less than the amount of the personal allowance to which the individual is entitled for that tax year under section 35 F52 ....

(3) For the purposes of subsection (2), an individual's “hypothetical net income” is the amount that would be that individual's net income calculated at Step 2 of section 23 if that individual's income tax liability were calculated on the basis that the individual—

(a) was UK resident for the tax year concerned (and the year was not a split year),

(b) was domiciled in the United Kingdom for that tax year,

(c) in that tax year, did not fall to be regarded as resident in a country outside the United Kingdom for the purposes of double taxation arrangements having effect at the time, and

(d) for that tax year, had made a claim for any available relief under section 6 of TIOPA 2010 (as required by subsection (6) of that section).

(4) An individual's hypothetical net income for a tax year is, to the extent that it is not sterling, to be calculated by reference to the average exchange rate for the year ending on 31 March in the tax year concerned.

Textual Amendments

F51 Words in s. 55C(1)(b) omitted (with effect in accordance with s. 5(11) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 5(9)

F52 Words in s. 55C(2) omitted (with effect in accordance with s. 5(11) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 5(9)

55D Procedure for elections under section 55C U.K.

(1) An election under section 55C is to be made not more than 4 years after the end of the tax year to which it relates.

(2) If the conditions in paragraphs (a) to (d) of section 55C(1) continue to be met, an election continues in force in each subsequent tax year unless—

(a) subsection (3) applies,

(b) the election is withdrawn, or

(c) it ceases to have effect under subsection (5).

(3) Where an election is made after the end of the tax year to which it relates, the election has effect for the tax year to which it relates only (and accordingly does not continue in force for subsequent tax years under subsection (2)).

(4) An election may be withdrawn only by a notice given by the individual by whom the election was made.

(5) If an individual's spouse or civil partner does not obtain a tax reduction under section 55B in respect of a tax year in which an election is in force the election ceases to have effect for subsequent tax years; but this does not prevent an individual making a further election for the purposes of section 55B(2)(a) (whether or not in relation to the same marriage or civil partnership).

(6) The withdrawal of an election under subsection (4) does not, except in the cases dealt with by subsection (7), have effect until the tax year after the one in which the notice is given.

(7) The withdrawal of an election under subsection (4) has effect for the tax year in which the notice is given if—

(a) in a case where the individual concerned met the condition in section 55C(1)(a) by reason of being married, the marriage has come to an end in that tax year, or

(b) in a case where the individual concerned met the condition in section 55C(1)(a) by reason of being in a civil partnership, the civil partnership has come to an end in that tax year.

(8) For the purposes of subsection (7)(a), a marriage comes to an end if any of the following is made in respect of it—

(a) a decree absolute of divorce, a decree of nullity of marriage or a decree of judicial separation, or

(b) in Scotland, a decree of divorce, a declarator of nullity or a decree of separation.

(9) For the purposes of subsection (7)(b), a civil partnership comes to an end if any of the following is made in respect of it—

(a) a dissolution order or nullity order, which has been made final,

(b) a separation order, or

(c) in Scotland, a decree of dissolution, a declarator of nullity or a decree of separation.

(10) A notice under subsection (4) must—

(a) 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.

(11) Paragraph 3(1)(b) of Schedule 1A to TMA 1970 (amendment of claims and elections) does not apply to an election under section 55C.

Supplementary U.K.

55E Limitation on number of tax reductions and elections U.K.

(1) An individual is not entitled to more than one tax reduction under section 55B 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) An individual is not entitled to have more than one election for the purposes of section 55B which operates for a tax year (regardless of whether the individual is a party to more than one marriage or civil partnership in the tax year).]

Chapter 4 U.K. General

56 Residence etc of claimants U.K.

(1) This section applies in relation to an individual who claims—

(a) an allowance under Chapter 2 (personal allowance and blind person's allowance) for a tax year, or

(b) a tax reduction under Chapter 3 [F53 or 3A] (tax reductions for married couples and civil partners) for a tax year.

(2) The individual meets the requirements of this section if the individual—

(a) is UK resident for the tax year, or

(b) meets the condition in subsection (3).

(3) An individual meets the condition in this subsection if, at any time in the tax year, the individual—

[F54 (za) is a national of an EEA state,]

(a) is resident in the Isle of Man or the Channel Islands,

(b) has previously resided in the United Kingdom and is resident abroad for the sake of the health of—

(i) the individual, or

(ii) a member of the individual's family who is resident with the individual,

(c) is a person who is or has been employed in the service of the Crown,

(d) is employed in the service of any territory under Her Majesty's protection,

(e) is employed in the service of a missionary society, or

(f) is a person whose late spouse or late civil partner was employed in the service of the Crown.

Textual Amendments

F53 Words in s. 56(1)(b) inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(7)

F54 S. 56(3)(za) inserted (21.7.2008 with effect in accordance with s. 70(4) of the amending Act) by Finance Act 2008 (c. 9), s. 70(2)

57 Indexation of allowances U.K.

(1) This section provides for increases in the amounts specified in—

(a) section [F55 35(1)] [F56 (personal allowance)],

F57 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F58 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) section 38(1) (blind person's allowance),

(e) section 43 (tax reductions for married couples and civil partners: the minimum amount),

(f) section 45(3)(a) F59 ... (marriages before 5 December 2005),

(g) section 46(3)(a) F60 ... (marriages and civil partnerships on or after 5 December 2005), and

(h) sections 36(2), F61 ... 45(4) and 46(4) (adjusted net income limit).

(2) It applies if the [F62 consumer prices index] for the September before the start of a tax year is higher than it was for the previous September.

(3) For the tax year—

(a) the allowances specified in sections [F63 35(1)] [F64 and] 38(1),

(b) the amounts specified in sections 45(3)(a) F65 ... and 46(3)(a) F65 ..., and

(c) the minimum amount specified in section 43,

are found as follows.

Step 1

Multiply the allowance, amount or (as the case may be) the minimum amount for the previous tax year by the same percentage as the percentage increase in the [F66 consumer prices index].

Step 2

If the result of Step 1 is a multiple of £10, it is the increase 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 increase for the tax year.

Step 3

Add the increase for the tax year to the allowance, amount or (as the case may be) the minimum amount for the previous tax year.

The result is the allowance, amount or (as the case may be) the minimum amount for the tax year.

(4) For the tax year, the adjusted net income limits specified in sections F67 ... F68 ... 45(4) and 46(4) are found as follows.

Step 1

Increase the adjusted net income limit for the previous tax year by the same percentage as the percentage increase in the [F69 consumer prices index].

Step 2

If the result of Step 1 is a multiple of £100, it is the adjusted net income 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 adjusted net income limit for the tax year.

(5) Subsections (1) to (4) 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.

(6) Before the start of the tax year the Treasury must make an order replacing the amounts specified in the provisions listed in subsection (1) with the amounts which, as a result of this section, are the allowances, amounts, the minimum amount and the adjusted net income limits for the tax year.

[F70 (7) In this section “consumer prices index” means the all items consumer prices index published by the Statistics Board.]

Textual Amendments

F55 Word in s. 57(1)(a) substituted (with effect in accordance with s. 4(5) of the amending Act) by Finance Act 2009 (c. 10), s. 4(3)

F56 Words in s. 57(1)(a) substituted (with effect in accordance with s. 5(11) of the amending Act) by Finance Act 2015 (c. 11), s. 5(10)(a)

F57 S. 57(1)(b) omitted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by virtue of Finance Act 2012 (c. 14), s. 4(6)(a)(ii)

F58 S. 57(1)(c) omitted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by virtue of Finance Act 2012 (c. 14), s. 4(6)(a)(ii)

F59 Words in s. 57(1)(f) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F60 Words in s. 57(1)(g) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F61 Word in s. 57(1)(h) omitted (with effect in accordance with s. 5(11) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 5(10)(b)

F62 Words in s. 57(2) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(3)(a)

F63 Word in s. 57(3)(a) substituted (with effect in accordance with s. 4(5) of the amending Act) by Finance Act 2009 (c. 10), s. 4(3)

F64 Word in s. 57(3)(a) substituted (17.7.2012) (with effect in accordance with s. 1(8) of the amending Act) by Finance Act 2012 (c. 14), s. 4(6)(b)

F65 Words in s. 57(3)(b) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

F66 Words in s. 57(3) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(3)(a)

F67 Word in s. 57(4) omitted (with effect in accordance with s. 2(9) of the amending Act) by virtue of Finance Act 2014 (c. 26), s. 2(8)(b)

F68 Word in s. 57(4) omitted (with effect in accordance with s. 5(11) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 5(10)(c)

F69 Words in s. 57(4) substituted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(3)(a)

F70 S. 57(7) inserted (with effect in accordance with s. 4(4) of the amending Act) by Finance Act 2014 (c. 26), s. 4(3)(b)

Modifications etc. (not altering text)

C1 S. 57 excluded (21.7.2008) by Finance Act 2008 (c. 9), s. 2(2)(a)

C2 S. 57 excluded (21.7.2008) by Finance Act 2008 (c. 9), s. 3(2)(a)

C3 S. 57 excluded (21.7.2009) by Finance Act 2009 (c. 10), s. 3(2)(a)

C4 S. 57 excluded (19.7.2011) by Finance Act 2011 (c. 11), s. 3(2)

C5 S. 57 excluded (17.7.2012) by Finance Act 2012 (c. 14), s. 3(2)

C6 S. 57 excluded (17.7.2013) by Finance Act 2013 (c. 29), s. 2(2)

C7 S. 57 excluded (17.7.2014) by Finance Act 2014 (c. 26), s. 1(4)(b)

C8 S. 57 excluded (17.7.2014) by Finance Act 2014 (c. 26), s. 2(2)(b)

C9 S. 57 excluded (26.3.2015) by Finance Act 2015 (c. 11), ss. 2(2), 5(2)

58 Meaning of “adjusted net income” U.K.

(1) For the purposes of Chapters 2 and 3, an individual's adjusted net income for a tax year is calculated as follows.

• Step 1

  Take the amount of the individual's net income for the tax year.

• Step 2

  If in the tax year the individual makes, or is treated under section 426 as making, a gift that is a qualifying donation for the purposes of Chapter 2 of Part 8 (gift aid) deduct the grossed up amount of the gift.

• Step 3

  If the individual is given relief in accordance with section 192 of FA 2004 (relief at source) in respect of any contribution paid in the tax year under a pension scheme, deduct the gross amount of the contribution.

• Step 4

  Add back any relief under section 457 or 458 (payments to trade unions or police organisations) that was deducted in calculating the individual's net income for the tax year.

  The result is the individual's adjusted net income for the tax year.

(2) The grossed up amount of a gift is the amount of the gift grossed up by reference to the basic rate for the tax year.

(3) The gross amount of a contribution is the amount of the contribution before deduction of tax under section 192(1) of FA 2004.

[F71 (4) Subsection (6) of section 809ZM (removal of income tax relief in respect of tainted donations etc) excludes certain donations from being deducted at step 2 in subsection (1).]

Textual Amendments

F71 S. 58(4) inserted (19.7.2011) (with effect in accordance with Sch. 3 para. 27 of the amending Act) by Finance Act 2011 (c. 11), Sch. 3 para. 9