Section 485G Miscellaneous (Chapter 2A)
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Amendments
Section 485G inserted by Finance Act 2006 section 17(1) for 2007 and later tax years.
(1) Nothing in this Chapter shall prevent an individual referred to in paragraph (b) of section 267(1) who is entitled to a repayment of the whole or any part of the appropriate tax (within the meaning of section 256) by virtue of subsection (3) of section 267 from obtaining any such repayment in accordance with that subsection.
(2)(a) Where this Chapter applies to an individual for a tax year, the following provisions shall apply as respects the individual and any specified relief used by the individual in the tax year-
[(i) for the purposes of Part 9 and that Part as applied for the purposes of any other provision of the Tax Acts, the amount of any specified relief used by the individual in the tax year shall be determined without regard to the application to the individual for that year of section 485E,]1
(ii) the calculation of the amount unallowed under section 292 in the case of a specified relief shall take no account of the application of this Chapter to the relief for any tax year,
(iii) the application of this Chapter to a specified relief for any tax year shall not affect the determination of the amount of a balancing charge (within the meaning of section 274 and that section as applied for the purposes of any other provision of the Tax Acts) to be made on, or a balancing allowance (within the same meanings) to be made to, any individual in respect of that relief, but the amount of any such balancing charge to be made on that individual shall be reduced by the amount determined under paragraph (b) and where any such reduction applies
[the sum of—
(I) the amount of the individual’s excess relief for the year in which the balancing charge arises, and
(II) the amount of any excess relief carried forward to that year that is not deducted for that year,]2
shall be reduced by an amount equal to the amount by which the balancing charge is reduced,
and
(iv) the application of this Chapter to the individual for that year in respect of a specified relief shall be ignored for the purposes of determining whether any amount of the specified relief is available for carry-forward to a subsequent tax year.
(b)(i) The amount referred to in paragraph (a)(iii) is an amount equal to the lesser of-
[(I) the amount of the individual’s excess relief carried forward to the year in which the balancing charge arises and not deducted or not fully deducted for that year, before any reduction by reference to paragraph (a)(iii), and]3
(II) an amount equal to the sum of the amounts determined in accordance with subparagraph (ii) in respect of each tax year for which-
(A) section 485E applied to the individual, and
(B) an allowance was made to the individual,
in respect of the building or structure in respect of which the balancing charge arises.
(ii) The amount referred to in subparagraph (i)(II) is an amount determined by the formula-
A x E
S
where-
A is the amount of the allowance made to the individual for a year,
E is the amount of the individual's excess relief for that year, and
S is the individual's aggregate of the specified reliefs for that year.
Amendments
1 Subs (2)(a)(i) substituted by Finance Act 2007 section 18(1)(e)(i) for 2007 and later tax years.
2 Substituted by Finance Act 2007 section 18(1)(e)(ii) for 2007 and later tax years.
3 Substituted by Finance Act 2007 section 18(1)(e)(iii) for 2007 and later tax years.
Are balancing adjustments affected by the high earner restriction?
(2) You are deemed to have received all specified reliefs to which you are entitled for a tax year, even though such reliefs have been restricted by section 485E. This is because the restricted reliefs are "pooled", carried forward (where applicable)...
(3)(a) Where this Chapter applies to an individual for a tax year, then, to the extent that the individual’s taxable income determined in accordance with section 485E exceeds the amount of the profits, gains or income in respect of which the individual is chargeable under Schedules C, D, E and F the amount of the excess shall, notwithstanding any other provision of the Tax Acts, be deemed to be an amount of income chargeable to income tax under Case IV of Schedule D, but—
(i) the amount so chargeable shall not be reckoned in computing the individual’s total income for that year, and
(ii) this paragraph shall be disregarded for the purpose of determining-
(I) whether this Chapter should apply to an individual for a tax year, and
(II) the amount of "T" in the formula in the definition of "adjusted income" in section 485C(1) and in the formula in section 485E.
(b) Any assessment to income tax to be made on an individual for a tax year shall, notwithstanding any other provision of the Tax Acts, include, in addition to any income, profits or gains of the individual otherwise chargeable to income tax, any amount chargeable to income tax on the individual by virtue of paragraph (a), and the provisions of the Tax Acts, including in particular those provisions relating to the assessment, collection and recovery of tax and the payment of interest on unpaid tax, shall apply as respects any amount chargeable to income tax by virtue of paragraph (a).
(c) Where, but for this Chapter, no assessment to income tax would be made on an individual for a tax year, then a Revenue officer shall, notwithstanding any other provision of a Tax Acts, make an assessment to income tax on the individual to the best of the officer’s judgement of the amounts chargeable to income tax, including any amount chargeable by virtue of paragraph (a), and the provisions of the Tax Acts, including in particular those provisions relating to the assessment, collection and recovery of tax and the payment of interest on unpaid tax, shall apply as respects-
(i) any amount chargeable to income tax by virtue of paragraph (a), and
(ii) any assessment to income tax made on the individual by virtue of this paragraph.
Amendments
Subs (3) substituted by Finance Act 2007 section 18(1)(e)(iv) for 2007 and later tax years.
How is exempt income treated for the purposes of the high earner restriction?
(3) "Exempt" income is not exempt, to the extent to which it is included in restricted reliefs. For example, artistic income in excess of the threshold is now effectively taxed at 20%. The legislation expresses it in this way:...
(4)(a) Subject to paragraph (b) and subsection (5), where under any provision of the Tax Acts (other than any provision of this Chapter) the calculation of a relief, deduction, credit in relation to tax or, as the case may be, a reduction in the amount of tax payable arises for a tax year which requires total income, taxable income, tax payable or tax chargeable for the year to be taken into account as part of the calculation—
(i) that calculation shall be carried out as if this Chapter, other than section 485F, does not apply, and
(ii)(I) in the case of a relief or deduction, effect shall be given to such relief or deduction before the application of this Chapter but after the application of section 485F, or
(II) in the case of a credit in relation to tax or, as the case may be, a reduction in the amount of tax payable, the benefit of that credit or reduction (as calculated in accordance with subparagraph (i)) shall be given against the amount of tax to be charged on the individual for the year involved in relation to his or her taxable income as determined in accordance with section 485E.
(b) Where this Chapter applies to an individual for a tax year nothing in paragraph (a) shall affect the calculation of the amount of tax which is to be charged on the individual for the year involved in relation to his or her taxable income as determined in accordance with section 485E.
Amendments
Subs (4) inserted by Finance Act 2008 section 23(1) as respects any relief, deduction, credit in relation to tax or, as the case may be, a reduction in the amount of tax payable, details of which fall to be included in particulars on a return, required to be delivered under section 951, which is delivered on or after 31 January 2008.
(5) Where this Chapter applies to an individual for a tax year, the provisions of section 187 (as amended by the Finance Act 2008) or section 188 shall not apply to the individual for that year.
Amendments
Subs (5) inserted by Finance Act 2008 section 23(1) as respects any relief, deduction, credit in relation to tax or, as the case may be, a reduction in the amount of tax payable, details of which fall to be included in particulars on a return, required to be delivered under section 951, which is delivered on or after 31 January 2008.
