ACCA Advanced Taxation (ATX) Practice Exam

What is the lowest value considered for letting relief?

1. Gain less PRR

2. £30,000

3. Higher of PRR or £40,000

4. All of the above

The correct answer is: Gain less PRR

Letting relief is a specific relief that can be claimed by individuals selling a property that has been rented out during their ownership. It is relevant in calculating the taxable gains when considering Private Residence Relief (PRR). For a property that has been both a main residence and let out, letting relief can be claimed to reduce the amount of capital gains tax that is payable on the gain from the disposal of the property. The lowest value considered for this relief is actually related to the gains that occur after taking into account PRR. The correct answer reflects that letting relief is not just a set figure like £30,000 or £40,000, but is tied to the specifics of the gain or loss in question. This means that if a taxpayer has a gain that is lower than the private residence relief they are claiming, then the letting relief would only be available for that gain amount, making it the lowest value considered. Therefore, it directly relates to how letting relief interacts with the overall capital gain calculation, asserting that the lowest value will typically be the gain left after accounting for PRR. In contrast, the other options present more fixed values or concepts that do not accurately reflect the minimum threshold of letting relief dependent on the gain calculated after private residence relief is