Income Tax Act 2007 section 425

Total amount of income tax to which individual charged for a tax year

Section 425 sets out how to calculate the total amount of income tax an individual is charged for a tax year, for the purposes of the Gift Aid restrictions in sections 423 and 424.

• The individual's income tax liability is calculated following the standard method in section 23, but ignoring certain tax reductions (at Step 6) and ignoring Step 7 entirely
• Tax reductions that must be excluded are those for qualifying maintenance payments, double taxation relief by agreement, and relief for foreign tax where no double taxation arrangements exist
• From the resulting figure, deduct any tax treated as already paid or deducted under various provisions — including tax on UK company distributions without a tax credit, gains from life insurance contracts, settlor-interested settlements, and certain estate income
• A person who is entitled to credit against income tax under a double taxation agreement is treated as being entitled to a tax reduction under the relevant TIOPA 2010 provisions