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ACCA Strategic Professional · Advanced Taxation (UK) · Investment and other expenditure that reduces tax liabilities

Which statement about rent-a-room relief and ISAs is correct for the current examinable limits?

Rent-a-room relief is limited to £7,500 a year, while the overall ISA investment limit is £20,000 a year. The two reliefs are independent of each other and do not share a combined limit, so using one does not reduce the other.

  1. ARent-a-room relief has a limit of £7,500 per year, and ISAs have an overall investment limit of £20,000Correct
  2. BRent-a-room relief has a limit of £20,000 and ISAs have a limit of £7,500
  3. CBoth reliefs share a single combined limit of £20,000
  4. DRent-a-room relief has a limit of £3,000 and ISAs a limit of £1,000,000

Explanation

The examinable limits are £7,500 for rent-a-room relief and £20,000 overall for ISAs. The other options swap or invent limits, and the two reliefs are independent.

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