Income Tax Act 2007

28 After section 256 insert—

“256A Meaning of “adjusted net income”

(1) For the purposes of this Chapter an individual’s adjusted net income for a year of assessment is calculated as follows.

• Step 1

  Take the amount of the individual’s net income for the year of assessment.

• Step 2

  If in the year of assessment the individual makes, or is treated under section 426 of ITA 2007 as making, a gift that is a qualifying donation for the purposes of Chapter 2 of Part 8 of that Act (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 year of assessment under a pension scheme, deduct the gross amount of the contribution.

• Step 4

  Add back any relief under section 266 of this Act given by virtue of subsection (7) of that section (payments for life insurance etc) that was deducted in calculating the individual’s net income for the year of assessment.

  The result is the individual’s adjusted net income for the year of assessment.

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

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

256B Meaning of “the minimum amount”

In this Chapter “the minimum amount” means £2,350.”