Section 27 Order of deducting tax reductions: individuals

(1) This section makes provision about the order in which tax reductions are to be deducted at Step 6 of the calculation in section 23, if the taxpayer is an individual.

(2) Deduct the tax reductions in the order which will result in the greatest reduction in the taxpayer’s liability to income tax for the tax year.

(3) Subsection (2) is subject to subsections (4) to (6).

(4) If the taxpayer is entitled to tax reductions for the tax year under more than one of the provisions listed in subsection (5), a tax reduction under a provision mentioned earlier in the list must be deducted before a tax reduction under a provision mentioned later in the list.

(5) The provisions are—

Chapter 2 of Part 6 (VCT relief),

Chapter 1 of Part 5 (EIS relief),

Chapter 1 of Part 7 (community investment tax relief),

section 353(1A) of ICTA (relief for interest on loan to buy life annuity),

section 453 (qualifying maintenance payments),

section 459 of this Act or section 273 of ICTA (payments for benefit of family members), and

Chapter 3 of Part 3 of this Act or section 257A, 257AB, 257BA or 257BB of ICTA (tax reductions for married couples and civil partners).

(6) If the taxpayer is entitled to a tax reduction under—

(a) section 788 of ICTA (double taxation arrangements: relief by agreement), or

(b) section 790(1) of ICTA (relief for foreign tax where no double taxation arrangements),

that tax reduction must be deducted after any other tax reduction to which the taxpayer is entitled for the tax year.