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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 cap on income tax reliefs for 2025/26, which statement is correct for an individual with total income of £300,000 claiming unlimited-type reliefs that are subject to the cap?

The cap is £75,000. Reliefs subject to the cap are limited to the higher of £50,000 or 25% of income, and 25% of £300,000 is £75,000, which exceeds £50,000. High income does not remove the cap.

  1. AThe cap is £50,000 only
  2. BThe cap is £75,000, being 25% of incomeCorrect
  3. CThe cap is £100,000
  4. DThere is no cap if income exceeds £125,140

Explanation

Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income. 25% of £300,000 is £75,000, which is higher than £50,000. The cap is therefore £75,000.

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