Income Tax Act 2007 (c. 3)

Part 8 U.K. Other reliefs

Chapter 2 U.K. Gift aid

The relief U.K.

[F1 414A Tax reduction or charge if basic rate, and devolved basic rate, differ U.K.

(1) Subsections (3) and (4) apply if an individual makes a gift to a charity which is a qualifying donation, and for the tax year in which the gift is made—

(a) the individual is a Scottish taxpayer or a Welsh taxpayer,

(b) there is a difference between—

(i) the applicable devolved basic rate, and

(ii) the basic rate, and

(c) any of the individual’s income is liable to the applicable devolved basic rate.

(2) In this section—

• ““the applicable devolved basic rate”—

  (a)

  is the Scottish basic rate if the individual is a Scottish taxpayer, and

  (b)

  is the Welsh basic rate if the individual is a Welsh taxpayer,

• “the ADBR amount” is the amount of the individual’s income liable to the applicable devolved basic rate, and

• “the rate difference” means the difference between the basic rate and the applicable devolved basic rate.”

(3) If, for the tax year in which the gift is made, the applicable devolved basic rate is above the basic rate—

(a) the individual is entitled to a tax reduction for that tax year,

(b) the tax reduction is given effect at Step 6 of the calculation in section 23,

(c) where the ADBR amount is more than or equal to the grossed up amount of the gift, the amount of the tax reduction is equal to the grossed up amount of the gift multiplied by the rate difference, and

(d) otherwise, the amount of the tax reduction is equal to the ADBR amount multiplied by the rate difference.

(4) If, for the tax year in which the gift is made, the applicable devolved basic rate is lower than the basic rate—

(a) income tax is charged under this subsection for that tax year,

(b) the individual is the person liable for the tax,

(c) where the ADBR amount is more than or equal to the grossed up amount of the gift, the amount of the tax is equal to the grossed up amount of the gift multiplied by the rate difference, and

(d) otherwise, the amount of the tax is the ADBR amount multiplied by the rate difference,

but see subsection (5).

(5) If, in the case of an individual (and ignoring this subsection), the total amount of tax charged under subsection (4) for a tax year is greater than the individual’s section 414(2)(b) tax saving for that year, the total amount of that tax is limited so as to be equal to the individual’s section 414(2)(b) tax saving for that year.

(6) For the purposes of subsection (5), the amount of an individual’s “section 414(2)(b) tax saving” for a tax year is—

(a) if the amount calculated at Step 5 of the calculation in section 23 in the individual’s case for that year is less than it would be were section 414(2)(b) not to have effect, equal to the difference, and

(b) otherwise is nil.]

Textual Amendments

F1 S. 414A inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 12(8)