Income Tax Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Part 3 — Personal reliefs
Chapter 2 — Personal allowance and blind person’s allowance
18

Blind person’s allowance
38
Blind person’s allowance
(1)
An individual who makes a claim is entitled to a blind person’s allowance of
£1,660 for a tax year if the individual—
(a)
meets the first or second condition for the whole or part of the tax year,
5
and
(b)
meets the requirements of section 56 (residence etc).
(2)
The first condition is that the individual is registered as a blind person in a
register kept under section 29 of the National Assistance Act 1948 (c. 29)
(registers kept by local authorities in England and Wales) .
10
(3)
The second condition is that—
(a)
the individual is ordinarily resident in Scotland or Northern Ireland,
and
(b)
because of the individual’s blindness, the individual is unable to do any
work for which eyesight is essential.
15
(4)
If an individual who is entitled to a blind person’s allowance for a particular
tax year—
(a)
became registered as a blind person in a register kept under section 29
of the National Assistance Act 1948 in the tax year, but
(b)
obtained the evidence of blindness on the basis of which the
20
registration was made in the preceding tax year,

the individual is treated as having met the first condition for the whole of the
preceding tax year.
39
Transfer of part of blind person’s allowance to a spouse or civil partner
(1)
This section applies to an individual who is entitled to a blind person’s allowance under
25
section 38 for a tax year if—
(a)
the individual is a person whose spouse or civil partner is living with
the individual for the whole or any part of the tax year, and
(b)
the spouse or civil partner meets the requirements of section 56
(residence etc).
30
(2)
If—
(a)
the allowance exceeds the individual’s remaining relievable income,
(b)
the individual makes an election, and
(c)
the individual’s spouse or civil partner makes a claim,

the individual’s spouse or civil partner is entitled to an allowance for the tax
35
year equal to the amount of the excess.
(3)
The individual’s remaining relievable income is the amount found by—
(a)
taking the amount of the individual’s net income, and
(b)
subtracting any personal allowance to which the individual is entitled
for the tax year.
40
40
Election for transfer of allowance under section 39
(1)
An election under section 39—

Income Tax Bill
Part 3 — Personal reliefs
Chapter 3 — Tax reductions for married couples and civil partners
19

(a)
must be made on or before the fifth anniversary of the normal self-
assessment filing date for the tax year to which it relates, and
(b)
cannot be withdrawn.
(2)
If an individual makes an election for a tax year under section 39 the individual
is treated as also giving notice under section 51(4) that section 51(1) (tax
5
reductions for married couples and civil partners: transfer of unused relief) is
to apply for the tax year.
Supplementary
41
Allowances in year of death
(1)
Any allowance to which an individual is entitled under this Chapter for any tax
10
year, including the tax year in which the individual dies, is given in full.
(2)
If an individual was due to reach the age of 65 in a tax year, but dies in the tax
year before reaching that age, the individual is treated for the purposes of
section 36 as having reached the age of 65 in the tax year.
(3)
If an individual was due to reach the age of 75 in a tax year, but dies in the tax
15
year before reaching that age, the individual is treated for the purposes of
sections 36 and 37 as having reached the age of 75 in the tax year.
Chapter 3
Tax reductions for married couples and civil partners
Introduction
20
42
Tax reductions under Chapter
(1)
This Chapter contains provisions about entitlement to tax reductions in a case
where a party to a marriage or civil partnership was born before 6 April 1935.
(2)
Individuals are entitled to tax reductions under the following provisions of this
Chapter—
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(a)
section 45 (marriages before 5 December 2005),
(b)
section 46 (marriages and civil partnerships on or after 5 December
2005),
(c)
section 47 (election by individual to transfer relief under section 45 or
46),
30
(d)
section 48 (joint election to transfer relief under section 45 or 46),
(e)
section 49 (election for partial transfer back of relief),
(f)
section 51 (transfer of unused relief), and
(g)
section 52 (transfer back of unused relief).
(3)
The tax reductions under sections 45 to 49 are subject to section 54 (tax
35
reductions in the year of marriage or entry into civil partnership).
(4)
A tax reduction under this Chapter is given effect at Step 6 of the calculation in
section 23.

Income Tax Bill
Part 3 — Personal reliefs
Chapter 3 — Tax reductions for married couples and civil partners
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43
Meaning of “the minimum amount”
In this Chapter “the minimum amount” means £2,350.
44
Election for new rules to apply
(1)
In this Chapter “an election for the new rules to apply” means an election made
by a husband and wife who got married before 5 December 2005 for the new
5
rules to apply to them instead of the old rules.
(2)
In subsection (1)—
“the new rules” means the rules for relief under section 46 (marriages and
civil partnerships on or after 5 December 2005), and
“the old rules” means the rules for relief under section 45 (marriages
10
before 5 December 2005).
(3)
An election for the new rules to apply—
(a)
must be made jointly by the parties to the marriage,
(b)
must be made before the first tax year for which it is to be in force,
(c)
continues in force in each subsequent tax year, and
15
(d)
cannot be withdrawn.
Married couple’s allowance
45
Marriages before 5 December 2005
(1)
If a man—
(a)
makes a claim for a tax year, and
20
(b)
meets the conditions set out in subsection (2),

he is entitled to a tax reduction for the tax year of 10% of the amount specified
in subsection (3)(a) or (b) (as applicable).
(2)
The conditions are that—
(a)
for the whole or part of the tax year he is married and his wife is living
25
with him,
(b)
the marriage took place before 5 December 2005 and no election for the
new rules to apply is in force for the tax year,
(c)
he or his wife was born before 6 April 1935, and
(d)
he meets the requirements of section 56 (residence etc).
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(3)
The amount is—
(a)
£6,135, if either the man or his wife is aged 75 or over at some time in
the tax year, and
(b)
£6,065, in any other case.
(4)
For a man whose adjusted net income for the tax year exceeds £20,100, the
35
amounts specified in subsection (3) are reduced by—
(a)
half the excess, less
(b)
any reduction in his personal allowance under section 36(2) or 37(2).
(5)
But subsection (4) does not reduce the amounts specified in subsection (3)
below the minimum amount.
40
(6)
For the meaning of “adjusted net income” see section 58.

Income Tax Bill
Part 3 — Personal reliefs
Chapter 3 — Tax reductions for married couples and civil partners
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46
Marriages and civil partnerships on or after 5 December 2005
(1)
If an individual—
(a)
makes a claim for a tax year, and
(b)
meets the conditions set out in subsection (2),

the individual is entitled to a tax reduction for the tax year of 10% of the
5
amount specified in subsection (3)(a) or (b) (as applicable).
(2)
The conditions are that—
(a)
for the whole or part of the tax year the individual is married or in a
civil partnership and is living with the spouse or civil partner,
(b)
the marriage took place, or the civil partnership was formed, on or after
10
5 December 2005 or, if the marriage took place before that date, an
election for the new rules to apply is in force for the tax year,
(c)
the individual, or the spouse or civil partner, was born before 6 April
1935,
(d)
the individual meets the requirements of section 56 (residence etc), and
15
(e)
the individual’s net income for the tax year exceeds that of the spouse
or civil partner or, if they have the same amount of net income for the
tax year, the individual is specified in an election as the person to be
entitled to relief under this section for the year.
(3)
The amount is—
20
(a)
£6,135, if either the individual, or the spouse or civil partner, is aged 75
or over at some time in the tax year, and
(b)
£6,065, in any other case.
(4)
For an individual whose adjusted net income for the tax year exceeds £20,100,
the amounts specified in subsection (3) are reduced by—
25
(a)
half the excess, less
(b)
any reduction in the individual’s personal allowance under section
36(2) or 37(2).
(5)
But subsection (4) does not reduce the amounts specified in subsection (3)
below the minimum amount.
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(6)
An election under subsection (2)(e)—
(a)
is to be made jointly by the parties to the marriage or civil partnership,
and
(b)
is to be made on or before the fifth anniversary of the normal self-
assessment filing date for the tax year to which the election relates.
35
(7)
For the meaning of “adjusted net income” see section 58.
Elections to transfer relief
47
Election by individual to transfer relief under section 45 or 46
(1)
If—
(a)
an individual’s spouse or civil partner is entitled to a tax reduction under
40
section 45 or 46 for a tax year, and
(b)
the individual meets the conditions set out in subsection (2),

the individual is entitled to a tax reduction for that tax year of 10% of half the
minimum amount.

Income Tax Bill
Part 3 — Personal reliefs
Chapter 3 — Tax reductions for married couples and civil partners
22

(2)
The conditions are that the individual—
(a)
has made an election which is in force for the tax year,
(b)
makes a claim, and
(c)
meets the requirements of section 56 (residence etc).
(3)
If an individual is entitled to a tax reduction under subsection (1), the tax
5
reduction to which the individual’s spouse or civil partner is entitled under
section 45 or 46 is calculated for the tax year as if the appropriate amount were
reduced by half the minimum amount.
(4)
In subsection (3) “the appropriate amount” means—
(a)
if the individual’s spouse is entitled to a tax reduction under section 45,
10
the amount specified in section 45(3)(a) or (b) (as applicable), after any
reductions under section 45(4) and 54(2), or
(b)
if the individual’s spouse or civil partner is entitled to a tax reduction
under section 46, the amount specified in section 46(3)(a) or (b) (as
applicable), after any reductions under sections 46(4) and 54(2).
15
48
Joint election to transfer relief under section 45 or 46
(1)
If—
(a)
an individual’s spouse or civil partner is entitled to a tax reduction under
section 45 or 46 for a tax year, and
(b)
the conditions set out in subsection (2) are met,
20

the individual is entitled to a tax reduction for that tax year of 10% of the
minimum amount.
(2)
The conditions are that—
(a)
the individual and the individual’s spouse or civil partner have made
a joint election which is in force for the tax year,
25
(b)
the individual makes a claim, and
(c)
the individual meets the requirements of section 56 (residence etc).
(3)
If an individual is entitled to a tax reduction under subsection (1), the tax
reduction to which the individual’s spouse or civil partner is entitled under
section 45 or 46 is calculated for the tax year as if the appropriate amount were
30
reduced by the minimum amount.
(4)
In subsection (3) “the appropriate amount” means—
(a)
if the individual’s spouse is entitled to a tax reduction under section 45,
the amount specified in section 45(3)(a) or (b) (as applicable), after any
reductions under section 45(4) and 54(2), or
35
(b)
if the individual’s spouse or civil partner is entitled to a tax reduction
under section 46, the amount specified in section 46(3)(a) or (b) (as
applicable), after any reductions under sections 46(4) and 54(2).
49
Election for partial transfer back of relief
(1)
If an individual whose spouse or civil partner is entitled under section 48(1) to
40
a tax reduction for a tax year—
(a)
has made an election which is in force for the tax year, and
(b)
makes a claim,

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Part 3 — Personal reliefs
Chapter 3 — Tax reductions for married couples and civil partners
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the individual is entitled to a tax reduction for that tax year of 10% of half the
minimum amount (in addition to any tax reduction to which the individual is entitled
under section 45 or 46).
(2)
The amount of the tax reduction to which the individual’s spouse or civil
partner is entitled under section 48(1) for that tax year is 10% of half the
5
minimum amount (instead of 10% of the minimum amount).
50
Procedure for making and withdrawing elections under sections 47 to 49
(1)
This section applies to elections under sections 47 to 49.
(2)
An election—
(a)
must, except in the cases dealt with by subsection (3), be made before
10
the first tax year in which it is to be in force, and
(b)
continues in force in each subsequent tax year until it is withdrawn.
(3)
An election—
(a)
may be made in the first tax year in which it is to be in force if that is the
tax year in which the marriage takes place or the civil partnership is
15
formed, and
(b)
may be made in the first 30 days of the first tax year in which it is to be
in force if appropriate notice is given before the tax year.
(4)
In subsection (3), “appropriate notice” means notice given to an officer of
Revenue and Customs by the individual or (in the case of a joint election)
20
individuals concerned that it is intended to make the election.
(5)
An election may be withdrawn only by—
(a)
a notice given by the individual or individuals by whom the election
was made, or
(b)
a subsequent election under section 47, 48 or 49.
25
(6)
If an election is withdrawn under subsection (5)(a), the withdrawal does not
have effect until the tax year after the one in which the notice is given.
(7)
A notice under subsection (5)(a)—
(a)
must be given to an officer of Revenue and Customs, and
(b)
must be in the form specified by the Commissioners for Her Majesty’s
30
Revenue and Customs.
Transfer of unused relief
51
Transfer of unused relief
(1)
If—
(a)
an individual’s spouse or civil partner is entitled to a tax reduction under
35
section 45 or 46 for a tax year,
(b)
the spouse or civil partner’s MCA tax reductions are greater than the
spouse or civil partner’s comparable tax liability, and
(c)
the conditions set out in subsection (4) are met,

the individual is entitled to a tax reduction for that tax year equal to the unused
40
part of the spouse or civil partner’s MCA tax reductions.
(2)
The spouse or civil partner’s MCA tax reductions are the sum of—

Income Tax Bill
Part 3 — Personal reliefs
Chapter 3 — Tax reductions for married couples and civil partners
24

(a)
the tax reduction to which the spouse or civil partner is entitled under
section 45 or 46, and
(b)
any tax reduction under section 49 to which the spouse or civil partner is
entitled for the tax year.
(3)
The unused part of the spouse or civil partner’s MCA tax reductions is equal
5
to—
(a)
the spouse or civil partner’s MCA tax reductions, less
(b)
the spouse or civil partner’s comparable tax liability.
(4)
The conditions are that—
(a)
the spouse or civil partner gives notice to an officer of Revenue and
10
Customs that subsection (1) is to apply for the tax year,
(b)
the individual makes a claim, and
(c)
the individual meets the requirements of section 56 (residence etc).
(5)
The tax reduction to which the individual is entitled under subsection (1) is in
addition to any tax reduction to which the individual is entitled under section
15
47 or 48.
(6)
The meaning of “comparable tax liability” is given in section 53.
52
Transfer back of unused relief
(1)
If—
(a)
an individual’s spouse or civil partner is entitled to a tax reduction
20
under section 47 or 48 for a tax year,
(b)
the tax reduction is greater than the spouse or civil partner’s
comparable tax liability, and
(c)
the conditions set out in subsection (3) are met,

the individual is entitled to a tax reduction for that tax year equal to the unused
25
part of the spouse or civil partner’s tax reduction.
(2)
The unused part of the spouse or civil partner’s tax reduction is equal to—
(a)
the tax reduction to which the spouse or civil partner is entitled, less
(b)
the spouse or civil partner’s comparable tax liability.
(3)
The conditions are that—
30
(a)
the spouse or civil partner gives notice to an officer of Revenue and
Customs that subsection (1) is to apply for the tax year, and
(b)
the individual makes a claim.
(4)
The tax reduction to which the individual is entitled under subsection (1) is in addition
to any tax reduction to which the individual is entitled under section 45, 46 or 49.
35
(5)
The meaning of “comparable tax liability” is given in section 53.
53
Transfer of unused relief: general
(1)
For the purposes of sections 51 and 52, the comparable tax liability of an
individual is the amount of the individual’s tax left after Step 6 of the
calculation in section 23 for the tax year, making that calculation with the
40
modifications set out in subsections (2) and (3).
(2)
In making that calculation, do not deduct any tax reduction under—