Income Tax Act 2007 section 29

Tax reductions: supplementary

Section 29 provides supplementary rules governing how tax reductions are applied at Step 6 of the income tax calculation, including limits that prevent reductions from exceeding the available tax liability.

• A tax reduction at Step 6 can only be deducted to the extent that there is sufficient tax calculated at Step 5, taking into account any tax reductions already deducted.
• For individual taxpayers, certain investment-related tax reductions (EIS, SEIS, social investment relief, VCT relief and community investment tax relief) are further capped at the Step 5 tax figure minus the amount of tax treated as deducted from Gift Aid donations in the year.
• These rules operate alongside — and do not override — the limits on foreign tax credit relief set out in TIOPA 2010 and any other statutory provisions that restrict the size of a tax reduction.
• A person entitled to credit against income tax under a double taxation agreement is treated as being entitled to a tax reduction for the purposes of this part of the Act.