Allocation of Allowances and Deductions

Introduction

There is a new section within the data entry for tax calculation, which illustrates how the deductions and allowances have been allocated in the most beneficial way, following the HMRC calculation.

To access this screen in Personal Tax go to Reliefs | Miscellaneous | Tax Calculation | Allocation of Allowances and Deductions

Data Entry

This screen shows how the allowances and deductions have been offset against all the income types: non-savings, savings, dividends, lump sums, and chargeable events gain.

 

 

The allocation of allowances within IRIS for each income type is already set, as per the HMRC calculation. Therefore, this will  not need to be amended in most circumstances, as the allocation will beneficial to the client.

The tick box option for the allowances gives the ability to reallocate the deductions and allowances in any way the user sees fit, which can be used against the non-savings, savings, dividends, lump sums, and chargeable events gain. This added functionality gives the flexibility of altering the allocation, when exclusions are encountered.  

However, when the allowances and reliefs are overridden manually,  a rejection will occur when trying to file online; a paper return will need to be submitted in these instances.

Additionally, trading losses brought forward and used are not included in the total allowances amount that can be reallocated.

 

Printing on the computation

When running the Tax computation, it will now be updated to show the allocation of allowances on the bottom of the computation, providing further clarification on the report.

 

 

This section can be suppressed by deselecting the box in the Report Options screen.

 

 

If the allowances have been overridden and the amount of relief is not equal to the IRIS calculated amount, then on the computation this amount will show as 'All other deductions and allowances'.

Again, in this circumstance the return will be rejected online and will need to be filed by paper.