Income Tax Act 2007 section 423

Restriction of certain reliefs

Section 423 restricts certain personal tax reliefs to ensure that an individual who makes Gift Aid donations pays enough tax to cover the tax that charities will reclaim on those donations.

• Where the basic rate tax treated as deducted from Gift Aid donations ("amount A") exceeds the individual's combined income tax and capital gains tax liability for the year ("amount B"), certain personal reliefs must be reduced or removed.
• The reliefs that can be restricted include the personal allowance, the blind person's allowance, the married couple's allowance or civil partner's allowance, and relief for payments to trade unions and police organisations.
• These reliefs are only reduced to the extent necessary to bring the individual's total tax charge up to equal amount A, or as close to it as possible if full equality cannot be achieved.
• If restricting all available reliefs still leaves the tax charge short of amount A, a separate income tax charge arises under section 424 to recover the shortfall.