ACCA Applied Skills · Taxation (UK) · The comprehensive computation of taxable income and income tax liability
Tomas has income of £300,000 for 2025/26. He claims a trading loss against total income of £90,000, which is subject to the cap on income tax reliefs and not otherwise restricted. How much of the loss can be relieved against his total income in 2025/26?
£75,000 of the loss can be relieved. The cap is the higher of £50,000 or 25% of income, and 25% of £300,000 is £75,000. Since the £90,000 loss exceeds this cap, relief is limited to £75,000.
- A£50,000
- B£90,000
- C£75,000Correct
- D£25,000
Explanation
25% of £300,000 is £75,000, which exceeds £50,000, so the cap is £75,000. The loss of £90,000 exceeds this, so only £75,000 can be relieved. £50,000 ignores that 25% of income is higher.
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