Overview
139.This Chapter makes provision for the personal allowance and the blind person’s allowance. It is based on sections 256(1), 257, 265 and 278 of ICTA.
140.The residence requirement for each allowance has been built into sections 35 to 39 with no special provision for claims by non-UK residents to be made to the Commissioners for Her Majesty’s Revenue and Customs. Claims for allowances are made to officers of Revenue and Customs, and no appeals are reserved to the Special Commissioners. This is achieved by not specifying to whom claims are to be made. See Change 5 in Annex 1.
Section 34: Allowances under Chapter
141.This section introduces the Chapter and explains where to find the rules relating to those allowances given by deduction from income. It is new.
Section 35: Personal allowance for those aged under 65
142.This section sets out the conditions for an individual aged under 65 to be entitled to a personal allowance. It is based on sections 256(1), 257 and 278 of ICTA.
143.Section 256 of ICTA makes it clear that a claim is required. Although in practice this personal allowance is often given automatically for years for which a valid claim would still be possible (a practice which will continue), it is necessary to retain the formal claims procedure in order to provide a mechanism to resolve disputed claims. For claims generally, see Change 5 in Annex 1 and the overview commentary on this Chapter.
Section 36: Personal allowance for those aged 65 to 74
144.This section provides a higher level of allowance for individuals aged 65 to 74. It is based on sections 256(1), 257 and 278 of ICTA.
145.Subsection (2) is the rule that the allowance is reduced if the individual’s adjusted net income exceeds a threshold. But the allowance cannot be reduced below the amount of the personal allowance in section 35.
Section 37: Personal allowance for those aged 75 and over
146.This section provides a higher level of allowance for individuals aged 75 and over. It is based on sections 256(1), 257 and 278 of ICTA.
147.As in section 36, subsection (2) rewrites the rule that provides for the reduction of the allowance if the claimant’s income exceeds a threshold. But the allowance cannot be reduced below the amount of the personal allowance in section 35.
Section 38: Blind person’s allowance
148.This section deals with the conditions for blind person’s allowance. It is based on sections 256(1), 265 and 278 of ICTA.
149.As with the personal allowances, the residence requirement has been built into subsection (1). In fact, due to the particular conditions of the relief set out in the following subsections, it is very rare for a non-resident to be entitled to the allowance.
150.Section 265(1) of ICTA requires the claimant to be a “registered blind person”. This term is defined in section 265(7) in two legs.
151.The first leg refers to registers compiled under section 29 of the National Assistance Act 1948. That Act never applied to Northern Ireland and was repealed in relation to Scotland by the Social Work (Scotland) Act 1968 (section 95(2) and Part 1 of Schedule 9). It follows that any registers maintained by local authorities in Scotland or Northern Ireland or by Societies for the Blind on their behalf are not registers under section 29. So subsection (2) makes it clear that this condition can only apply to registers kept by local authorities in England and Wales.
152.The second leg of the definition in section 265(7), which applies only to Scotland and Northern Ireland, refers to persons who are blind within the meaning of section 64(1) of the National Assistance Act 1948. This definition, which is that the individual is unable to do any work for which eyesight is essential, is the same as that underpinning entitlement to registration by local authorities in England and Wales, and is set out in subsection (3).
153.Subsection (4) legislates ESC A86. This treats a claimant as satisfying the registration condition in the year prior to formal registration where evidence of blindness on which registration is based had been obtained in that prior year. See Change 6 in Annex 1.
Section 39: Transfer of part of blind person’s allowance to a spouse or civil partner
154.This section allows the transfer of any excess allowance due to a blind person to his or her spouse or civil partner if the blind person’s income is insufficient to absorb the allowance fully. It is based on sections 256(1), 265 and 278 of ICTA.
155.It is implicit in section 265 of ICTA that a spouse or civil partner receiving all or part of an allowance under this provision must be an individual entitled to claim allowances in their own right. Subsection (1) makes this explicit by incorporating the residence requirement for the receiving spouse or civil partner.
156.Subsection (2) specifies that it is only the excess allowance that can be transferred, that the transferor must make an election (see section 40), and makes it clearer that in order to be entitled to the allowance the transferee must claim it.
157.Subsection (3) provides rules for determining the amount by which the allowance exceeds income for the purposes of this section. It takes the amount of net income as the starting point. The appropriate personal allowance is then deducted.
158.Section 265(3)(c) of ICTA has not been rewritten as it is obsolete.
Section 40: Election for transfer of allowance under section 39
159.This section sets out rules about elections under section 39. It is based on section 265(5) and (6) of ICTA.
160.There is no need to specify that the election must be in the form specified by the Commissioners for Her Majesty’s Revenue and Customs since paragraph 2(3) of Schedule 1A to TMA achieves that result.
161.Subsection (2) provides that if an individual has made an election for the transfer of his or her excess blind person’s allowance in a tax year then this is also treated as an election for the transfer of any excess tax reduction for married couples and civil partners.
Section 41: Allowances in year of death
162.This section addresses the position if an individual dies in the tax year for which an allowance may be due. It is based on section 257(4) of ICTA.
163.Subsection (1) is new, but states what is implicit in the current legislation. The amount of the allowance for any tax year is not reduced on account of death, so that the full amount is due, even if death occurs on 6 April.
164.Subsections (2) and (3) provide that the age-related personal allowances are given for a tax year on the basis that an individual will reach 65 or 75 in that year and are not affected if death occurs before the relevant birthday.
