ACCA Applied Skills · Taxation (UK) · The use of exemptions and reliefs in deferring and minimising income tax liabilities
Marta has total income of £320,000 for 2025/26. She has reliefs that are subject to the cap, and no other restriction applies to them. What is the maximum amount of these reliefs that she can deduct in the year?
Marta can deduct at most £80,000 of capped reliefs. The cap is the higher of £50,000 or 25% of income, and 25% of her £320,000 income is £80,000, which exceeds £50,000.
- A£50,000
- B£64,000
- C£80,000Correct
- D£320,000
Explanation
25% of £320,000 is £80,000. This is higher than £50,000, so the cap is £80,000. Using £50,000 ignores the 25% of income alternative, and £64,000 wrongly applies 20% of income.
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