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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: the use of exemptions and reliefs in deferring and minimising income tax liabilities

Under the ATX-UK tax tables for Finance Act 2025, income tax reliefs that are subject to the cap are limited, unless otherwise restricted, to which amount?

The cap on income tax reliefs is the higher of £50,000 or 25% of income, unless otherwise restricted. The taxpayer gets whichever figure is larger, so a person with income above £200,000 can claim reliefs beyond £50,000, up to 25% of their income.

  1. AThe higher of £50,000 or 25% of incomeCorrect
  2. BThe lower of £50,000 or 25% of income
  3. CA fixed £50,000 regardless of income
  4. DThe higher of £60,000 or 25% of income

Explanation

The tax tables state that, unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income. The lower-of version reverses the test and would cap reliefs too tightly for high earners. A fixed £50,000 ignores the 25% alternative.

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