ACCA Applied Skills · Taxation (UK) · The scope of income tax
Marcus has income of £280,000 for 2025/26 and claims reliefs that are subject to the cap on income tax reliefs, with no other restriction. What is the maximum amount of reliefs he can deduct?
The maximum is £70,000. The cap is the higher of £50,000 or 25% of income. Twenty-five percent of £280,000 equals £70,000, which is greater than £50,000, so the percentage measure sets the limit on reliefs.
- A£50,000
- B£56,000
- C£70,000Correct
- D£280,000
Explanation
25% of £280,000 is £70,000. This exceeds £50,000, so the cap is the higher figure, £70,000. Using £50,000 ignores the percentage alternative, and £56,000 wrongly uses 20%.
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