Section 423: Restriction of certain reliefs
1195.This section restricts certain reliefs, where necessary to ensure that the individual pays enough tax to match any tax which might be refunded to the charities receiving the gifts. It is based on section 25(6)(c) of FA 1990.
1196.The section operates if the amount of income tax treated as deducted from an individual’s gifts, “amount A” insubsection (2), is greater than “amount B”.
1197.The source legislation does not expressly say how “amount B” is to be calculated. This section makes clear that the only difference between “amount B” (from section 25(6)(c) of FA 1990) and “amount C” in section 424 (from section 25(9) of that Act) is that “amount B” is calculated before any restriction of personal reliefs under this section. See Change 78 in Annex 1 and the commentary on section 425.
1198.So “amount B” is:
the income tax liability as defined in section 425 but before applying any reduction in reliefs under this section; plus
the capital gains tax liability.
1199.Section 25(6)(b) and (7) of FA 1990 are not rewritten. These provisions relate to certain of the tax reductions listed in section 27(5) of this Act. The effect of the relevant provisions in section 25(6)(b) and (7) of FA 1990 is achieved by the operation of sections 23 and 425(2) of this Act.
1200.The reliefs listed in subsection (5) are to be reduced only to the extent necessary. If all such available reliefs are extinguished and the liability still falls short of amount A, a charge to income tax arises under section 424.
