Income Tax Act 2007

Cited as:2007 c. 3
Jurisdiction:UK Non-devolved


Income Tax Act 2007

2007 Chapter 3

An Act to restate, with minor changes, certain enactments relating to income tax; and for connected purposes.

[20th March 2007]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1 Overview

Part 1

Overview

S-1 Overview of Income Tax Acts

1 Overview of Income Tax Acts

(1) The following Acts make provision about income tax—

(a) ITEPA 2003 (which is about charges to tax on employment income, pension income and social security income)

(b) ITTOIA 2005 (which is about charges to tax on trading income, property income, savings and investment income and some other miscellaneous income), and

(c) this Act (which contains the other main provisions about income tax)

(2) There are also provisions about income tax elsewhere: see in particular—

(a) Part 18 of ICTA (double taxation relief)

(b) CAA 2001 (allowances for capital expenditure), and

(c) Part 4 of FA 2004 (pension schemes etc)

(3) Schedule 1 to the Interpretation Act 1978 (c. 30)

defines "the Income Tax Acts" (as all enactments relating to income tax).

S-2 Overview of Act

2 Overview of Act

(1) This Act has 17 Parts.

(2) Part 2 contains basic provisions about income tax including—

(a) provision about the annual nature of income tax (Chapter 1),

(b) the rates at which income tax is charged (Chapter 2), and

(c) the calculation of income tax liability (Chapter 3).

(3) Part 3 is about taxpayers' personal reliefs including—

(a) personal allowances (Chapter 2),

(b) blind persons' allowances (Chapter 2), and

(c) tax reductions for married couples and civil partners (Chapter 3).

(4) Part 4 is about loss relief including relief for—

(a) trade losses (Chapters 2 and 3),

(b) losses from property businesses (Chapter 4),

(c) losses in an employment or office (Chapter 5),

(d) losses on disposal of shares (Chapter 6), and

(e) losses from miscellaneous transactions (Chapter 7).

(5) Part 5 is about relief under the enterprise investment scheme.

(6) Part 6 is about—

(a) relief for investment in venture capital trusts, and

(b) other matters relating to venture capital trusts.

(7) Part 7 is about community investment tax relief.

(8) Part 8 is about a variety of reliefs including relief for—

(a) interest payments (Chapter 1),

(b) gifts to charity including gift aid (Chapters 2 and 3),

(c) annual payments and patent royalties (Chapter 4), and

(d) maintenance payments (Chapter 5).

(9) Part 9 contains special rules about settlements and trustees including—

(a) general provision about settlements and trustees (Chapter 2),

(b) special income tax rates for trusts (Chapters 3, 4, 5 and 6),

(c) rules about trustees' expenses (Chapters 4 and 8),

(d) rules about trustees' discretionary payments (Chapter 7),

(e) rules about unauthorised unit trusts (Chapter 9), and

(f) rules about heritage maintenance settlements (Chapter 10).

(10) Part 10 contains special rules about charitable trusts etc.

(11) Part 11 is about manufactured payments and repos.

(12) Part 12 is about accrued income profits.

(13) Part 13 is about tax avoidance in relation to—

(a) transactions in securities (Chapter 1),

(b) transfers of assets abroad (Chapter 2),

(c) transactions in land (Chapter 3),

(d) sales of occupation income (Chapter 4), and

(e) trade losses (Chapter 5).

(14) Part 14 deals with some miscellaneous rules about income tax liability, including—

(a) limits on liability to income tax for non-UK residents (Chapter 1),

(b) special rules about residence (Chapter 2), and

(c) rules about jointly held property (Chapter 3).

(15) Part 15 is about the deduction of income tax at source.

(16) Part 16 contains definitions which apply for the purposes of the Income Tax Acts and other general provisions which apply for the purposes of those Acts.

(17) Part 17—

(a) contains provisions to be used in interpreting this Act,

(b) introduces Schedule 1 (minor and consequential amendments),

(c) introduces Schedule 2 (transitional provisions and savings),

(d) introduces Schedule 3 (repeals and revocations, including of spent enactments),

(e) introduces Schedule 4 (index of defined expressions that apply for the purposes of this Act),

(f) confers powers on the Treasury to make orders, and

(g) makes provision about the coming into force of this Act.

2 Basic provisions

Part 2

Basic provisions

Charges to income tax

Charges to income tax

S-3 Overview of charges to income tax

3 Overview of charges to income tax

(1) Income tax is charged under—

(a) Part 2 of ITEPA 2003 (employment income),

(b) Part 9 of ITEPA 2003 (pension income),

(c) Part 10 of ITEPA 2003 (social security income),

(d) Part 2 of ITTOIA 2005 (trading income),

(e) Part 3 of ITTOIA 2005 (property income),

(f) Part 4 of ITTOIA 2005 (savings and investment income), and

(g) Part 5 of ITTOIA 2005 (miscellaneous income).

(2) Income tax is also charged under other provisions, including—

(a) Chapter 5 of Part 4 of FA 2004 (registered pension schemes: tax charges),

(b) section 7 of F(No.2)A 2005 (social security pension lump sums),

(c) Part 10 of this Act (special rules about charitable trusts etc),

(d) Chapter 2 of Part 12 of this Act (accrued income profits), and

(e) Part 13 of this Act (tax avoidance).

S-4 Income tax an annual tax

4 Income tax an annual tax

(1) Income tax is charged for a year only if an Act so provides.

(2) A year for which income tax is charged is called a "tax year".

(3) A tax year begins on 6 April and ends on the following 5 April.

(4) "The tax year 2007-08" means the tax year beginning on 6 April 2007 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way).

(5) Every assessment to income tax must be made for a tax year.

(6) Subsection (5) is subject to Chapter 15 of Part 15 (by virtue of which an assessment may relate to a return period).

S-5 Income tax and companies

5 Income tax and companies

(1) Income tax is not charged on income of a company so far as the company is within the charge to corporation tax in respect of the income.

(2) See in particular sections 6(2) and 11(1) of ICTA for the circumstances in which a company is within the charge to corporation tax in respect of its income.

The rates

Rates at which income tax is charged

The rates

S-6 The starting rate, basic rate and higher rate

6 The starting rate, basic rate and higher rate

(1) The main rates at which income tax is charged are—

(a) the starting rate,

(b) the basic rate, and

(c) the higher rate.

(2) The starting rate, basic rate and higher rate for a tax year are the rates determined as such by Parliament for the tax year.

(3) For other rates at which income tax is charged see—

(a) section 7 (savings rate),

(b) section 8 (dividend ordinary rate and dividend upper rate), and

(c) section 9 (trust rate and dividend trust rate).

S-7 The savings rate

7 The savings rate

The savings rate is 20%.

S-8 The dividend ordinary rate and dividend upper rate

8 The dividend ordinary rate and dividend upper rate

(1) The dividend ordinary rate is 10%.

(2) The dividend upper rate is 32.5%.

S-9 The trust rate and dividend trust rate

9 The trust rate and dividend trust rate

(1) The trust rate is 40%.

(2) The dividend trust rate is 32.5%.

Income charged at particular rates

Income charged at particular rates

S-10 Income charged at the starting, basic and higher rates: individuals

10 Income charged at the starting, basic and higher rates: individuals

(1) Income tax is charged at the starting rate on an individual's income up to the starting rate limit

(2) Income tax is charged at the basic rate on an individual's income above the starting rate limit and up to the basic rate limit

(3) Income tax is charged at the higher rate on an individual's income above the basic rate limit.

(4) This section is subject to—

section 12 (income charged at the savings rate),

section 13 (income charged at the dividend ordinary and dividend upper rates: individuals), and

any other provisions of the Income Tax Acts which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(5) See section 20 for the starting rate limit and the basic rate limit.

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