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

Under the official ATX-UK tax tables, what is the cap on income tax reliefs that a participator in a close company can use, unless otherwise restricted?

Income tax reliefs are capped at the higher of £50,000 or 25% of income, unless otherwise restricted. This is the figure given in the ATX-UK tax tables, so a person with high income can claim more than £50,000 of reliefs.

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

Explanation

The tax tables state that, unless otherwise restricted, income tax reliefs are capped at the higher of £50,000 or 25% of income. The lower-of formulation reverses the test.

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