{
  "url": "https://openlegislation.uk/income-tax-act-2007/section-25",
  "json_url": "https://openlegislation.uk/income-tax-act-2007/section-25.json",
  "legislation": "ukpga/2007/3",
  "legislation_title": "Income Tax Act 2007",
  "legislation_url": "https://openlegislation.uk/income-tax-act-2007",
  "path": "section/25",
  "kind": "section",
  "number": "25",
  "heading": "Reliefs and allowances deductible at Steps 2 and 3: supplementary",
  "text": "(1) This section supplements the provisions about reliefs and allowances in Steps 2 and 3 of the calculation in section 23.\n(2) At Steps 2 and 3, deduct the reliefs and allowances in the way which will result in the greatest reduction in the taxpayer's liability to income tax.\n(3) Subsection (2) is subject to—\nsection 65(2) to (4) (priority rule in relation to trade loss relief against general income),\nsection 80(2) (ring fence income),\nsection 83(3) and (4) (carry-forward trade loss relief against trade profits),\nsection 89(3) (terminal trade loss relief against trade profits),\nsection 93(2) (terminal trade loss relief and mineral extraction trade),\nsection 95(2) (foreign trades etc reliefs only against qualifying foreign income),\nsection 115(2) (restrictions on reliefs for firms exploiting films),\nsection 118(3) and (4) (carry-forward property loss relief against property business profits),\nsection 121(2) and (3) (priority rule in relation to property loss relief against general income),\nsection 129(2) to (4) (priority rule in relation to employment loss relief against general income),\nsection 133(4) (share loss relief against general income),\nsection 152(4) and (7) (loss relief against miscellaneous income),\nsections 412A(4), 412B(3) and 412C(3) (relief for irrecoverable peer-to-peer loans only against interest on certain loans),\nsections 574(3) to (8) and 575 (manufactured dividends on UK shares: restrictions on deductions),\nsection 579(2) to (5) and 580 (manufactured interest on UK securities: restrictions on deductions),\nsection 258 of CAA 2001 (special leasing of plant or machinery),\n...\nsection 479 of that Act (persons having qualifying non-trade expenditure),\nsection 41P of ITEPA 2003 (qualifying foreign employment income),\nsection 601 of ITTOIA 2005 (how relief for patent expenses is given),\nsection 845A of ITTOIA 2005 (qualifying foreign income), and\nany other provision of the Income Tax Acts under which reliefs or allowances deductible at Step 2 or 3 are not permitted to be deducted from particular components of income or are required to be deducted from particular components of income or in a different order.\n(3A) Subsection (2) is also subject to a requirement that the reliefs and allowances in Steps 2 and 3 must be deducted from components of income other than property income, savings income or dividend income (so far as it would otherwise be possible to do so) before they are deducted from property income, savings income or dividend income.\n(4) A relief or allowance may be deducted at Step 2 or 3 only so far as there is sufficient income from which to deduct it.\n(5) In deciding whether there is sufficient income from which to deduct a relief or allowance, reliefs and allowances already deducted at Step 2 or 3 must be taken into account.\n(6) Nothing in Step 2 or 3 is to be read as permitting a relief or allowance to be deducted more than once.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "F",
      "label": "F1",
      "text": "Words in s. 25(3) inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 32(4)"
    },
    {
      "type": "F",
      "label": "F2",
      "text": "S. 25(3) entry omitted (21.7.2008 with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 27(3)"
    },
    {
      "type": "F",
      "label": "F3",
      "text": "Words in s. 25(3) inserted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2026 (c. 11), Sch. 3 para. 1(3)(5)"
    },
    {
      "type": "F",
      "label": "F4",
      "text": "S. 25(3A) inserted (for the tax year 2027-28 and subsequent tax years) by Finance Act 2026 (c. 11), s. 6(6)(8)"
    },
    {
      "type": "C",
      "label": "C1",
      "text": "S. 25(2) modified (21.7.2009) by Finance Act 2009 (c. 10), Sch. 6 para. 1(6)"
    },
    {
      "type": "C",
      "label": "C2",
      "text": "S. 25(2) excluded by 2005 c. 5, s. 535(8) (as inserted (with effect in relation to the tax year 2019-20 and subsequent tax years) by Finance Act 2020 (c. 14), s. 37(2)(5) (with s. 37(6)))"
    },
    {
      "type": "C",
      "label": "C3",
      "text": "S. 25(2) modified (10.6.2021) by Finance Act 2021 (c. 26), Sch. 2 para. 1(6) (with Sch. 2 para. 3(2)(3))"
    },
    {
      "type": "C",
      "label": "C4",
      "text": "S. 25(2) modified (10.6.2021) by Finance Act 2021 (c. 26), Sch. 2 para. 2(6) (with Sch. 2 para. 3(2)(3))"
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/ukpga/2007/3/section/25",
    "retrieved_at": "2026-10-29T09:13:03.599581+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}