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A limit is placed on the amount of credit allowed against a person's income for any tax year¹.The amount of credit in respect of income from a particular source cannot exceed the UK income tax attributable to that income.

The legislation achieves this result through formulae comparing UK tax on total income subject to alternative adjustments, so that the credit is capped at the difference between²:

1. Ìý

   •ÌýÌýÌýÌý the amount of income tax to which a person would be liable for the tax year if the person were charged to income tax on total income reduced by any income that has already been made subject to the limit; and

2. Ìý

   •ÌýÌýÌýÌý the amount of income tax on which the person would be liable if the person were charged to income tax on total income reduced by income already subject to the limit and the income in respect of which credit is to be allowed.

The legislation describes these amounts in terms of formulae: respectively