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

Under the Finance Act 2025 tax tables, what is the cap on income tax reliefs for an individual whose reliefs are not otherwise restricted?

Reliefs are capped at the higher of £50,000 or 25% of income, unless otherwise restricted. The cap therefore never falls below £50,000 and rises with income once 25% of income exceeds £50,000, so high earners get a larger cap than low earners.

  1. AThe higher of £50,000 or 25% of incomeCorrect
  2. BThe lower of £50,000 or 25% of income
  3. CA fixed amount of £50,000 whatever the level of income
  4. DThe higher of £25,000 or 50% 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 option reverses the rule. A flat £50,000 ignores the 25% alternative that helps high earners. The last option swaps the two figures.

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