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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: the comprehensive computation of taxable income and the income tax liability

Hamza has total income of £320,000 for 2025/26. He wishes to claim income tax reliefs that are subject to the cap and are not otherwise restricted. What is the maximum amount of such reliefs he can deduct?

Hamza's cap is £80,000. The cap is the higher of £50,000 or 25% of income, and 25% of his £320,000 income is £80,000, which is greater than £50,000, so £80,000 is the maximum reliefs he can deduct.

  1. A£50,000
  2. B£64,000
  3. C£80,000Correct
  4. D£320,000

Explanation

25% of £320,000 is £80,000. This exceeds £50,000, so the higher figure of £80,000 applies. £50,000 uses the wrong limb, and £64,000 wrongly applies 20% of income.

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