Skip to content

ACCA Applied Skills · Taxation (UK) · The scope of income tax

Priya has income of £240,000 for 2025/26. She claims reliefs of £62,000 that are subject to the cap on income tax reliefs, with no other restriction. What amount of these reliefs is restricted, that is, cannot be deducted?

£2,000 is restricted. The cap is the higher of £50,000 or 25% of income. Twenty-five percent of £240,000 is £60,000, so reliefs are capped at £60,000. Claiming £62,000 therefore leaves £2,000 that cannot be deducted.

  1. A£2,000Correct
  2. B£12,000
  3. C£0
  4. D£62,000

Explanation

25% of £240,000 is £60,000, which is higher than £50,000, so the cap is £60,000. Reliefs claimed of £62,000 exceed the cap by £2,000. Using £50,000 would wrongly give a restriction of £12,000.

Did you get it right without looking?

One question tells you little. A timed set on The scope of income tax shows your real accuracy, how long you take and where you lose marks.

Practise The scope of income taxFree diagnostic mock

More The scope of income tax questions