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

Under the ATX-UK tax rates and allowances for Finance Act 2025, which statement correctly describes the savings income nil rate band?

The savings income nil rate band is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. The band is smaller for those paying tax at the higher rate. The rates and allowances table for Finance Act 2025 sets this out.

  1. A£1,000 for basic rate taxpayers and £500 for higher rate taxpayersCorrect
  2. B£1,000 for all taxpayers regardless of their rate band
  3. C£500 for basic rate taxpayers and £1,000 for higher rate taxpayers
  4. D£1,000 for basic rate taxpayers and £500 for additional rate taxpayers only

Explanation

The tax rates table gives a savings income nil rate band of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. The reverse allocation in another option is wrong because higher earners receive the smaller band. The £1,000 for all option ignores the reduction for higher rate taxpayers.

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