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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

Which statement about the cap on income tax reliefs in ATX-UK is correct?

The cap is the higher of £50,000 or 25% of income, unless the relief is otherwise restricted. It is a separate limit from the pension annual allowance of £60,000 and the £200,000 threshold income limit.

  1. AThe cap is the lower of £50,000 or 25% of income
  2. BThe cap applies only where income exceeds £200,000
  3. CThe cap is £60,000, matching the annual allowance
  4. DThe cap is the higher of £50,000 or 25% of income, unless the relief is otherwise restrictedCorrect

Explanation

The tax tables give the cap as the higher of £50,000 or 25% of income, unless otherwise restricted. It is not linked to the £60,000 pension annual allowance or the £200,000 threshold income limit.

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