RPSM15101110 - Technical Pages: Special annual allowance: £130,000 limit: Anti-avoidance

This guidance only applies for the 2009-10 and 2010-11 tax years.

Anti-avoidance rule for relevant income

Where an individual enters into a scheme or arrangement with the aim of reducing their relevant income below the £130,000 threshold, then the legislation assumes the relevant income to be £130,000. This rule would apply if the scheme was designed to affect any of the steps taken to arrive at relevant income, for example, by reducing income by moving some into another year or by turning it into capital, and by increasing deductions by using artificial losses etc.

Similarly where an individual entered a scheme or arrangement with the aim of ensuring that their relevant income for the 2009-2010 tax year is less than £150,000 it will be assumed that their relevant income is £150,000 for that tax year.

Note - the terms ‘scheme’ or ‘arrangements’ are used here in the sense of avoidance devices rather than pension schemes or pension arrangements. Such a ‘scheme’ or ‘arrangement’ includes any agreement, understanding, transaction or series of transactions (whether or not legally enforceable).