Personal Tax- How Personal Allowance is abated or not

ias-12104

Personal Tax- How Personal Allowance is abated or not

13th October 2015

IRIS Personal Tax

IRIS Personal Tax- tax computation shows a higher/lower amount of personal allowance than expected

Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above (2021/2022 Period).

Adjusted net income is total taxable income before any Personal Allowances and less certain tax reliefs, for example:
1) Trading losses
2) Donations made to charities through Gift Aid
3) Pension contributions paid gross (before tax relief)
4) Pension contributions where your pension provider has already given you tax relief at the basic rate

For example in 2014 tax year:

Currently the IRIS computation does not show a breakdown of the abatement calculation- this has been added to our enhancement request list for possible development within a future version. Example of an abatement calculation Income = £113, 587 Minus = £5, 652 which is made up of pension payments 5, 533 and gift aid 95 x 100/80 = 119 Total = £107, 935 Minus = £100,000 Income Limit for Personal Allowances Total = £7, 935 x 50% = £3967.50 Personal Allowance = 9440 – 3967 = 5473. Where excluded income is concerned please see knowledge base https://www.iris.co.uk/support/knowledgebase/kb/ias-10608/