I have a salary taxed at source but also declared interest earnings from NZ. This interest earned was largely offset by investing in a SIPP here. However, the tax office first calculated my income (taxable) with a basic rate applied to £33,500 and higher rate to 610 (as applied to my salary). However, they then added the amount I had paid into a SIPP, (offsetting foreign interest income), onto the basic tax rate increasing the 20% tax band to £39,313.
By doing this they have 'reduced the amount of income charged to higher rates of tax' but at the same time this reduces the amount of tax relief I am entitled to?
Surely the tax band of 11,501 to £33,500 should remain?
Can anyone help me with this please or is there some case law? The person at the tax department appears to use a form but cannot explain to me how or why they are coming up with this extended basic rate tax band?
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