188体育

Relief under the CITR scheme cannot be claimed until after the end of the tax year (ITA/s335). But individual investors who have received a tax relief certificate and who wish to obtain relief for an investment for the current year without waiting for the year to end can effectively do so by

• requesting a change to their PAYE code number, or
• by claiming a reduction their self-assessment (SA) payments on account.

PAYE coding adjustments: Investors to note

PAYE taxpayers can write to their tax office and ask to have relief included provisionally in their current year鈥檚 PAYE code number. Where provisional relief is given in the code, the individual must formally claim the relief after the end of the year.

PAYE coding adjustments: Tax offices to note

There are no plans to introduce a coding descriptor for CITR relief nor a coding adjustment to claw back excess relief. Instead, the relief due should be converted to a coding allowance which will give the best estimate of the amount of relief due - see examples 1 and 2 below.

Tax officers should use the descriptor CR (Concessional Relief) and either

• issue the P2 manually, describing the relief as Community Investment Relief, or
• use the freehand notes space or a separate letter for an explanation and let the system issue the P2. Note that in such a case the relief will automatically be described as Concessional Relief.

Where provisional relief is given in the code, the individual must formally claim the relief after the end of the year. Tax officers should ensure that where such provisional relief is given to someone outside SA, the case is brought into SA for the year for which relief is claimed.

Example 1

An individual subscribes 拢10,000 for shares a community development finance institution (CDFI) in January 2003. The relief due in terms of tax is 拢500 (5% of 拢10,000), and the estimated liability at the investor鈥檚 highest rate is 拢6,000 (拢15,000 @ 40%).

The investor鈥檚 estimated liability at the highest rate (拢6,000) exceeds the relief due in terms of tax (拢500). The coding allowance (CR) will be 拢1,200 that is, the relief due in terms of tax (拢500) divided by the investor鈥檚 highest rate (40%).

Example 2

An individual subscribes 拢100,000 for shares a community development finance institution (CDFI) in January 2003. His expected earnings for the year are 拢40,000. Personal allowances due are 拢4,615.

1. Work out the expected liability for the year.

Earnings 拢40,000

Less PA 4615

35,385

1920 @ 10% = 192.00

27,980 @ 22% = 6,155.60

5,485 @ 40% = 2.194.00

8,541.60

Less CITR = (5,000)

Relief:

拢100,000

@ 5% =

Tax due = 3,451.60

2. Calculate the coding allowance

Total due from above 拢3,451.60

Chargeable @10% 1,920 = 192.00

Chargeable to produce @22% 15,225* = 3,349.50
鈥渞ight鈥� liability

Total 拢3,451.50

Earnings 40,000

Less total chargeable (17,145)

Net coding allowances 22,855

Less PA (4615)

CITR relief coding (CR) 18,240

* 3,541.60 - 192.00 x 100/22 = 15,225 (subject to slight discrepancy due to rounding)

Payments on Account

Individuals already within SA and who have, or are due to make, payments on account can make a claim for those payments to be reduced to take account of relief that they believe will be due (TMA70/s59A/(3)&(4).

If such a claim proves excessive when the SA return is received, then interest will be charged from the relevant due dates.