Commentary

E1.101C Income tax calculation for individuals—Step 2 reliefs

Personal and employment tax

E1.101C Income tax calculation for individuals—Step 2 reliefs

E1.101C Income tax calculation for individuals—Step 2 reliefs

Income tax is an annual tax on income that is levied a tax year basis. The tax year begins on 6 April and ends on the following 5 April.1

For a discussion on the meaning of income, see E1.101.

The following persons are liable to pay income tax on their taxable income for the tax year, with the extent of the liability being dependent on their tax residence status:

  1.  

    •     individuals

  2.  

    •     trustees

  3.  

    •     personal representatives

  4.  

    •     companies

For further details, see E1.101.

The income tax calculation for individuals is prescribed by the steps in ITA 2007, s 23 and is discussed in detail in E1.101B. The commentary below discusses the deductions from component income or total income that are made at Step 2 of the income tax calculation, before the deduction of the personal allowance.

For details of the income tax calculation for trustees, see I5.1003. For details of the income tax calculation for personal representatives, see I4.534 and I4.535. For details of the income tax calculation for companies, see D4.122.

Step 2 reliefs—overview

Step 2 reliefs from income fall into two categories:

  1.  

    •     deductions from component income (meaning that relief can be obtained only against a certain category or categories of income), or

  2.  

    •     deductions from total income (which may be subject to the cap on income tax reliefs, see 'Limit to Step 2 reliefs' below)

The amounts that can be deducted at Step 2 are listed below,

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial