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Income Tax Act 2007

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This is the original version (as it was originally enacted).

25Reliefs and allowances deductible at Steps 2 and 3: supplementary

This section has no associated Explanatory Notes

(1)This section supplements the provisions about reliefs and allowances in Steps 2 and 3 of the calculation in section 23.

(2)At Steps 2 and 3, deduct the reliefs and allowances in the way which will result in the greatest reduction in the taxpayer’s liability to income tax.

(3)Subsection (2) is subject to—

  • section 65(2) to (4) (priority rule in relation to trade loss relief against general income),

  • section 80(2) (ring fence income),

  • section 83(3) and (4) (carry-forward trade loss relief against trade profits),

  • section 89(3) (terminal trade loss relief against trade profits),

  • section 93(2) (terminal trade loss relief and mineral extraction trade),

  • section 95(2) (foreign trades etc reliefs only against qualifying foreign income),

  • section 115(2) (restrictions on reliefs for firms exploiting films),

  • section 118(3) and (4) (carry-forward property loss relief against property business profits),

  • section 121(2) and (3) (priority rule in relation to property loss relief against general income),

  • section 129(2) to (4) (priority rule in relation to employment loss relief against general income),

  • section 133(4) (share loss relief against general income),

  • section 152(4) and (7) (loss relief against miscellaneous income),

  • sections 574(3) to (8) and 575 (manufactured dividends on UK shares: restrictions on deductions),

  • section 579(2) to (5) and 580 (manufactured interest on UK securities: restrictions on deductions),

  • section 258 of CAA 2001 (special leasing of plant or machinery),

  • section 355 of that Act (buildings for miners etc: carry-back of balancing allowances),

  • section 479 of that Act (persons having qualifying non-trade expenditure),

  • section 601 of ITTOIA 2005 (how relief for patent expenses is given), and

  • any other provision of the Income Tax Acts under which reliefs or allowances deductible at Step 2 or 3 are not permitted to be deducted from particular components of income or are required to be deducted from particular components of income or in a different order.

(4)A relief or allowance may be deducted at Step 2 or 3 only so far as there is sufficient income from which to deduct it.

(5)In deciding whether there is sufficient income from which to deduct a relief or allowance, reliefs and allowances already deducted at Step 2 or 3 must be taken into account.

(6)Nothing in Step 2 or 3 is to be read as permitting a relief or allowance to be deducted more than once.

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