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Deductions for adjusted income

Pensions - annual allowance taper for high earners with charity donations

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Help please, if you can.  I've hit a wall in understanding deductions permitted in arriving at "adjusted income" for annual allowance taper for pensions  (which I believe HMRC explains as commencing with 'net income ... calculated under steps 1 and 2 of section 23 of the Income Tax Act 2007' and understand isn't the same as 'adjusted net income' for tax rates etc)

Permitted reliefs under s24 ITA 2007 include Chapter 3 of Part 8 (gifts of shares, securities and real property to charities etc).  What is "etc" ... most advice commentary either ignores s24 or simply refers to "some reliefs."  A few FAs loosely illustrate with  'Mr x donated £y to charity' and make a deduction of £y. 

Say my client has gross income from all earned and investment sources of £165,000; her employer contributed £25,000 pension contributions; client donated £7,000 to UK charities under Gift Aid and I don't think she has much wriggle room at all from carried forward annual allowances.

Is adjusted income:

  1. 165k plus 25k minus 7k? or
  2. 165k plus 25k minus grossed up £8.75k?  or
  3. 165k plus 25k?  or
  4. none of these?

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By John R
15th Jun 2018 13:55

3. I agree that gift aid is not one of the reliefs set out in Step 2.

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