VCM64060 - VCT scheme: reliefs: 'front-end' income tax relief: reducing SA payments on account

Front-end income tax relief cannot be claimed in-year. The relief takes the form of a reduction in the tax payable and ranks after various other reliefs and allowances. The amount of relief cannot be known for certain until after the end of the tax year. For this reason TMA70/S42 (1A) excludes these reliefs from in-year claims, except where a claim is made for the relief to be given through a tax code (see VCM64070).

Any claims made for front-end income tax relief to be given against SA payments on account, must be made by way of a claim to reduce the SA payments on account. If the claim proves to be excessive when the SA return is received, then interest will be charged from the relevant due dates.

Alternatively if the investor has a PAYE tax code then TMA70/S42 allows for investors to make an in-year claim for the relief to be included in their code number (see VCM64070). However the relief actually due will only be established on submission of the SA return at the end of the year.

In year claims for this relief must not be given effect to by using the free standing credit functionality.