Question 1

Section A: Objective Test

Fiona lets out a fully furnished residential property. During the tax year, she replaced an old washing machine (original cost £300) with a new, upgraded washer-dryer costing £600. A standard replacement washing machine would have cost £400. She paid £50 to dispose of the old machine. What is the allowable deduction for Replacement of Domestic Items Relief?

Accepted Answer

Apply the Replacement of Domestic Items Relief rules. The relief is limited to the cost of a like-for-like replacement. Add any incidental costs of disposing of the old item. Deduct any proceeds from selling the old item (none here).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Claiming the full cost of the upgraded item (£600).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 5

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