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- Point in Time (01/11/2004)
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Version Superseded: 06/04/2006
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3.—(1) The manner in which income of a claimant or, in the case of a joint claim, the aggregate income of the claimants, is to be calculated for a tax year for the purposes of Part 1 of the Act is as follows.
Step One
Calculate and then add together—
the pension income (as defined in regulation 5(1)),
the investment income (as defined in regulation 10),
the property income (as defined in regulation 11),
the foreign income (as defined in regulation 12) and
the notional income (as defined in regulation 13)
of the claimant, or, in the case of a joint claim, of the claimants.
If the result of this step is £300 or less, it is treated as nil.
If the result of this step is more than £300, only the excess is taken into account in the following steps.
Step Two
Calculate and then add together—
the employment income (as defined in regulation 4),
the social security income (as defined in regulation 7),
the student income (as defined in regulation 8) and
the miscellaneous income (as defined in regulation 18)
of the claimant, or in the case of a joint claim, of the claimants.
Step Three
Add together the results of Steps One and Two.
Step Four
Calculate the trading income (as defined in regulation 6) of the claimant, or in the case of a joint claim, of the claimants.
Add the result of this step to that produced by Step Three F1... in the year.
If there has been a trading loss in the year, [F2subtract] the amount of that loss from the result of Step Three.
[F3Any trading loss in the year not set off as a result of the calculations in Steps One to Four above due to an insufficiency of income may be carried forward and set off against trading income (if any) of the same trade, profession or vocation in subsequent years (taking earlier years first) for the purposes of calculation of income under this regulation.]
(2) Subject to the qualifications in the following paragraphs of this regulation, and the provisions of Part 3, the result of Step Four in paragraph (1) is the income of the claimant, or, in the case of a joint claim, of the claimants, for the purposes of the Act.
(3) Income which—
(a)arises in a territory outside the United Kingdom and
(b)is, for the time being, unremittable for the purposes of section 584 of the Taxes ActM1,
is disregarded in calculating the income of the claimant or, in the case of a joint claim, of the claimants.
(4) Paragraph (5) applies in the case of a claimant who is [F4, for income tax purposes]—
(a)resident [F5and domiciled but not ordinarily resident] in the United Kingdom, F6...
(b)resident and ordinarily resident but not domiciled in the United Kingdom, [F7or]
[F8(c)resident but neither ordinarily resident nor domiciled in the United Kingdom.]
(5) In the case of a person to whom this paragraph applies—
[F9(a)any income arising outside the United Kingdom is to be taken into account, subject to any specific provision of these Regulations, regardless of the domicile or residence of the claimant; and]
(b)references to a sum being [F10taken into account] are to be construed as including a sum which would be taxable if he were resident, ordinarily resident and domiciled in the United Kingdom.
[F11(5A) Any income is to be taken into account, subject to any specific provision of these Regulations, notwithstanding the provision of any Order in Council under section 788 of the Taxes Act (double taxation agreements).]
(6) In the case of a claimant who would be chargeable to income tax but for some special exemption or immunity from income tax, income shall be calculated on the basis of the amounts which would be so chargeable but for that exemption or immunity.
[F12(6A) Income paid to a claimant in a currency other than sterling shall be converted into sterling at the average of the exchange rates applicable for the conversion of that currency into sterling in the period of 12 months ending on 28th March in the tax year in which the income arises.]
(7) In calculating income under this Part there shall be deducted F13...—
(a)[F14the amount of] any banking charge or commission payable in converting to sterling a payment of income which is made in a currency other than sterling;
(b)[F15the grossed-up amount of] any qualifying donation (within the meaning of section 25 of the Finance Act 1990 (donations to charity by individuals)M2), made by the claimant or, in the case of a joint claim, by either or both of the claimants; F16...
(c)[F17the amount of] any contribution made by the claimant, or in the case of a joint claim, by either or both of the claimants to—
(i)a retirement benefits scheme approved under Chapter 1 of Part 14 of the Taxes Act, including a pilots benefit fund approved under section 607 of that ActM3and a relevant statutory scheme within the meaning of section 611A of that ActM4;
(ii)a retirement annuity contract approved under Chapter 3 of Part 14 of that Act; or
(iii)a personal pension scheme, approved under [F18Chapter 4 of Part 14 of that Act;][F19and]
[F20together with the amount of any tax relief due on those contributions.]
[F21(d)any contribution made by the claimant, or in the case of a joint claim, by either or both of the claimants, if made in accordance with Inland Revenue Extra Statutory Concession A9.]
[F22(8) If—
(a)a claimant has sustained a loss in relation to a Schedule A business or an overseas property business; and
(b)the relief to which he is entitled in accordance with section 379A(2) and (3) of the Taxes Act exceeds the amount of his property income or foreign income for tax credits purposes, for the year in question;
the amount of his total income for tax credit purposes, computed in accordance with the preceding provisions of this regulation, shall be reduced by the amount of the excess.
In this paragraph “Schedule A business” and “overseas property business” have the same meanings as they have in the Taxes Act.]
Textual Amendments
F1Words in reg. 3(1) omitted (6.4.2003) by virtue of The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(2)(a)
F2Word in reg. 3(1) substituted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(2)(b)
F3Words in reg. 3(1) added (26.11.2003) by The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(2)
F4Words in reg. 3(4) inserted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(3)(a)
F5Words in reg. 3(4)(a) substituted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(3)(b)
F6Word in reg. 3(4)(a) omitted (26.11.2003) by virtue of The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(3)(a)
F7Word in reg. 3(4)(b) added (26.11.2003) by The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(3)(b)
F8Reg. 3(4)(c) added (26.11.2003) by The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(3)(c)
F9Reg. 3(5)(a) substituted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(4)(a)
F10Words in reg. 3(5)(b) substituted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(4)(b)
F11Reg. 3(5A) inserted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(5)
F12Reg. 3(6A) inserted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(6)
F13Words in reg. 3(7) omitted (6.4.2003) by virtue of The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(7)(a)
F14Words in reg. 3(7)(a) inserted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(7)(b)
F15Words in reg. 3(7)(b) inserted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(7)(c)
F16Word in reg. 3(7)(b) omitted (26.11.2003) by virtue of The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(4)(a)
F17Words in reg. 3(7)(c) inserted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(7)(d)(i)
F18Words in reg. 3(7)(c)(iii) substituted (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(7)(d)(ii)
F19Word in reg. 3(7)(c)(iii) added (26.11.2003) by The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(4)(b)
F20Words in reg. 3(7)(c) added (6.4.2003) by The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2003 (S.I. 2003/732), regs. 1, 5(7)(d)(iii)
F21Reg. 3(7)(d) added (26.11.2003) by The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(4)(c)
F22Reg. 3(8) added (26.11.2003) by The Tax Credits (Miscellaneous Amendments No.2) Regulations 2003 (S.I. 2003/2815), regs. 1, 4(5)
Marginal Citations
M1Relevant amendments to section 584 have been made by section 134 of, and paragraph 33 of Schedule 20 to the Finance Act 1996 (c.8).
M2Section 25 has been partly repealed by section 71(5) and (6) of the Finance Act 1991 (c.31) and amended by subsections (1) to (7) and (10) of section 39 of the Finance Act 2000.
M3Section 607 was amended by section 104(2) and (3) of the Finance Act 1994 (c.9).
M4Section 611A was inserted by paragraph 15 of Schedule 5 to the Finance Act 1989 (c.26) and amended by paragraph 5 of Schedule 5 to the Finance Act 1999 (c.16).
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