Income Tax Act 2007

[F1 55B Tax reduction: entitlement U.K.

(1) An individual is entitled to a tax reduction for a tax year of the appropriate percentage of the transferable amount if the conditions in subsection (2) are met.

(2) The conditions are that—

[F2 (a) the individual is the gaining party (see section 55C(1)(a)) in the case of an election under section 55C which is in force for the tax year,]

(b) the individual is not, for the tax year, liable to tax at a rate other than the basic rate, [F3 the default basic rate, the savings basic rate,] [F4 the dividend nil rate,] [F5 the Scottish basic rate,] [F6 a Scottish rate below the Scottish basic rate, the Scottish intermediate rate,] [F7 the Welsh basic rate,] the dividend ordinary rate [F8 , the savings nil rate] or the starting rate for savings,

[F9 (ba) if for the tax year the individual is liable to tax at the dividend nil rate, the individual would for that year neither be liable to tax at the dividend upper rate, nor be liable to tax at the dividend additional rate, if section 13A (dividend nil rate) were omitted,]

(c) the individual meets the requirements of section 56 (residence) for the tax year, and

(d) neither the individual nor the [F10 relinquishing] spouse or civil partner makes a claim for the tax year under section 45 (married couple's allowance: marriages before 5 December 2005) or section 46 (married couple's allowance: marriages and civil partnerships on or after 5 December 2005).

(3) “The appropriate percentage” is the basic rate [F11 or default basic rate] [F12 or, in the case of a Scottish taxpayer [F13 or Welsh taxpayer], the Scottish basic rate] [F14 or Welsh basic rate] at which the individual would be charged to income tax for the tax year to which the reduction relates.

(4) “The transferable amount”—

(a) for the tax year 2015-16, is [F15 £1,060], and

(b) for the tax year 2016-17 and subsequent tax years, is 10% of the amount of personal allowance specified in section 35(1) for the tax year to which the reduction relates.

(5) If the transferable amount calculated in accordance with subsection (4)(b) would otherwise not be a multiple of £10, it is to be rounded up to the nearest amount which is a multiple of £10.

[F16 (5A) In this section “the relinquishing spouse or civil partner”, in relation to an election under section 55C, means the individual mentioned in section 55C(1)(a) by whom, or by whose personal representatives, the election is made.]

(6) If an individual is entitled to a tax reduction under subsection (1) [F17 by reference to an election under section 55C] , the personal allowance to which the [F18 relinquishing] spouse or civil partner is entitled under section 35 F19 ... is reduced for the tax year by the transferable amount.

(7) If an individual who is entitled to a tax reduction for a tax year under subsection (1) dies during that tax year, subsection (6) is to be ignored (but this does not affect the individual's entitlement to the tax reduction).]

Textual Amendments

F1 Pt. 3 Ch. 3A inserted (with effect in accordance with s. 11(12) of the amending Act) by Finance Act 2014 (c. 26), s. 11(2)

F2 S. 55B(2)(a) substituted (retrospective and with effect in accordance with s. 6(12)(b)(c) of the amending Act) by Finance Act 2018 (c. 3), s. 6(3)(a)(12)(a)

F3 Words in s. 55B(2)(b) inserted (30.11.2016) (with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(15)(a)(24); S.I. 2016/1161, regs. 2, 3

F4 Words in s. 55B(2)(b) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(6)(a)(10)

F5 Words in s. 55B(2)(b) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 14(3)(a)

F6 Words in s. 55B(2)(b) inserted (6.4.2018) by The Scottish Rates of Income Tax (Consequential Amendments) Order 2018 (S.I. 2018/459), arts. 1(2), 6(2)

F7 Words in s. 55B(2)(b) 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, 12(6)(a)

F8 Words in s. 55B(2)(b) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 4(8)(17)

F9 S. 55B(2)(ba) inserted (with effect for the tax year 2016-17 and subsequent years) by Finance Act 2016 (c. 24), s. 5(6)(b)(10)

F10 Word in s. 55B(2)(d) substituted (retrospective and with effect in accordance with s. 6(12)(b)(c) of the amending Act) by Finance Act 2018 (c. 3), s. 6(3)(b)(12)(a)

F11 Words in s. 55B(3) inserted (30.11.2016) (with effect in relation to tax year 2017-18 and subsequent tax years) by Finance Act 2016 (c. 24), s. 6(15)(b)(24); S.I. 2016/1161, regs. 2, 3

F12 Words in s. 55B(3) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 14(3)(b)

F13 Words in s. 55B(3) 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, 12(6)(b)(i)

F14 Words in s. 55B(3) inserted (with effect in accordance with art. 1(2) of the amending S.I.) The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1, 12(6)(b)(ii)

F15 Sum in s. 55B(4)(a) substituted (with effect in accordance with s. 3(5) of the amending Act) by Finance Act 2015 (c. 11), s. 3(4)

F16 S. 55B(5A) inserted (retrospective and with effect in accordance with s. 6(12)(b)(c) of the amending Act) by Finance Act 2018 (c. 3), s. 6(4)(12)(a)

F17 Words in s. 55B(6) inserted (retrospective and with effect in accordance with s. 6(12)(b)(c) of the amending Act) by Finance Act 2018 (c. 3), s. 6(5)(a)(12)(a)

F18 Word in s. 55B(6) substituted (retrospective and with effect in accordance with s. 6(12)(b)(c) of the amending Act) by Finance Act 2018 (c. 3), s. 6(5)(b)(12)(a)

F19 Words in s. 55B(6) omitted (with effect in accordance with s. 5(11) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 5(8)