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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: property and investment income

Which statement about the cap on income tax reliefs is correct when an individual with a furnished holiday letting loss and other income seeks relief?

Unlimited income tax reliefs are capped at the higher of £50,000 or 25% of the individual's income, unless otherwise restricted. The other options use the wrong figures or the lower rather than the higher measure.

  1. AReliefs are capped at the higher of £50,000 or 25% of income, unless otherwise restrictedCorrect
  2. BReliefs are capped at the lower of £50,000 or 25% of income
  3. CReliefs are capped at a fixed £25,000 for all taxpayers
  4. DReliefs are capped at the higher of £100,000 or 50% of income

Explanation

The tax rates and allowances state that, unless otherwise restricted, income tax reliefs are capped at the higher of £50,000 or 25% of income. The other options misstate either the amount, the percentage or the choice of higher/lower.

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