I can't even find steps 5 & 6 (see below) but the notes next to 'Was your Income over £50K' on SA clearly states when calculating ANI 'then take off any tax reliefs that apply' with the caveat to add back those made to trade unions or police organistaions. I can find no specific mention of how 'property tax relief' should be dealt with anywhere.
We have looked into your enquiry concerning the Income from Property finance cost restriction and if it can be accounted for when calculating net income for High Income Child Benefit Charge purpose.
I am afraid that customers cannot deduct the full 100% finance costs or deduct the basic rate reducer as a tax relief when working out their adjusted net income.
HICBC imposes a charge on an individual who has Adjusted Net Income (ANI) above £50,000 in a tax year (PAYE14015)
There is some guidance on our website on adjusted net income and how it’s calculated:
The basic rate reducer is not included in the calculation of ANI. SA will calculate the ANI, including any rental profit and apply the HICBC, based on the restricted finance costs. The basic rate reducer is applied at step 6 of the calculation of tax liability, after the charge has been applied.
The legislation at s23 ITA 2007, shows how tax liability is calculated and the charge is applied at step 5, the reducer is applied at step 6 and hence only the restricted finance costs can be used. Self-assessment shows this in the calculation where HICBC is due.