Part 2Basic provisions

Chapter 3Calculation of income tax liability

29Tax reductions: supplementary

(1)

This section supplements the provisions about tax reductions in Step 6 of the calculation in section 23.

(2)

A tax reduction may be deducted at Step 6 only so far as there is sufficient tax calculated at Step 5 of the calculation from which to deduct it.

(3)

In deciding whether there is sufficient tax calculated at Step 5 from which to deduct a tax reduction, tax reductions already deducted at Step 6 must be taken into account.

(4)

Subsections (2) and (3) apply in addition to—

(a)

F1sections 36(1) to (5) and (7) and 41 of TIOPA 2010 (limits on credit for foreign tax), and

(b)

any other provision of the Income Tax Acts that limits the amount of a tax reduction.

F2(4A)

If the taxpayer is an individual, the total of the tax reductions within subsection (4B) that are deducted at Step 6 must not be greater than—

A − B

where—

  • A is the amount of tax calculated at Step 5, and

  • B is the total amount of the tax treated under section 414 (gift aid) as deducted from gifts made by the taxpayer in the tax year.

(4B)

A tax reduction is within this subsection if it is under—

  • Chapter 1 of Part 5 (EIS relief),

  • F3Chapter 1 of Part 5A (SEIS relief),

  • F4Chapter 1 of Part 5B (relief for social investments),

  • Chapter 2 of Part 6 (VCT relief), or

  • Chapter 1 of Part 7 (community investment tax relief).

(4C)

Subsection (4A) applies in addition to subsections (2) and (3).

(5)

For the purposes of this Chapter, a person is treated as being entitled to a tax reduction under F5sections 2 and 6 of TIOPA 2010 if the person is entitled to credit against income tax under double taxation arrangements.