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ACCA ATX practice questions

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Question 1The UK tax system and its administration

What period does the UK tax year cover for an individual taxpayer?

  1. 1 January to 31 December
  2. 6 April to 5 April Correct answer.
  3. 6 April to 6 April
  4. 1 April to 31 March

Explanation

The UK tax year for individuals runs from 6 April in one year to 5 April in the next. Company accounting periods are set by reference to the company's own accounts, not the tax year.

Question 2The UK tax system and its administration

By what date must an individual file a paper self assessment return for the 2023/24 tax year?

  1. 31 October 2024 Correct answer.
  2. 5 April 2025
  3. 31 January 2025
  4. 31 July 2025

Explanation

A paper self assessment return must be filed by 31 October following the end of the tax year. Filing online extends the deadline to 31 January.

Question 3The UK tax system and its administration

An individual files a 2023/24 self assessment return online. By what date must the return be submitted and the balancing payment made?

  1. 31 October 2024
  2. 5 April 2025
  3. 31 January 2025 Correct answer.
  4. 31 July 2025

Explanation

A self assessment return filed online must be submitted by 31 January following the end of the tax year. The balancing payment and the first payment on account are also due on that date.

Question 4The UK tax system and its administration

Payments on account are required where the previous year's income tax and Class 4 NIC liability exceeds a threshold and less than 80% of it was collected at source. What is that threshold?

  1. £2,000
  2. £500
  3. £5,000
  4. £1,000 Correct answer.

Explanation

Payments on account are required where the previous year's income tax and Class 4 NIC liability exceeds £1,000 and less than 80% of that liability was collected at source. Both conditions must be met.

Question 5The UK tax system and its administration

A taxpayer's 2023/24 income tax liability was £12,000, of which £8,000 was collected at source. What is each payment on account for 2024/25?

  1. £4,000
  2. £2,000 Correct answer.
  3. £6,000
  4. £1,000

Explanation

Each payment on account is 50% of the previous year's relevant liability, being income tax and Class 4 NIC not collected at source. The £4,000 balance gives payments of £2,000 on 31 January and 31 July.

Question 6The UK tax system and its administration

What penalty is charged when an individual's self assessment return is filed after the filing deadline but before it is three months late?

  1. £200
  2. £10
  3. £300
  4. £100 Correct answer.

Explanation

A fixed £100 penalty is charged as soon as a self assessment return is filed late, even if the tax is paid on time. Further penalties apply as the delay continues.

Question 7The UK tax system and its administration

What daily penalty applies when a self assessment return is more than three months late?

  1. £100 per day
  2. £20 per day
  3. £5 per day
  4. £10 per day Correct answer.

Explanation

Once a return is three months late, a daily penalty of £10 applies for up to 90 days. This is in addition to the initial £100 fixed penalty.

Question 8The UK tax system and its administration

What is the first late payment penalty charged on income tax that remains unpaid after the due date?

  1. Ten per cent after thirty days
  2. Five per cent after fourteen days
  3. Three per cent after thirty days
  4. Five per cent after thirty days Correct answer.

Explanation

A 5% late payment penalty is charged on tax still unpaid 30 days after the due date. Further 5% penalties arise at six and twelve months.

Question 9The UK tax system and its administration

How long must a self-employed individual normally keep business records for tax purposes?

  1. Three years from the date the return was submitted
  2. Five years from the end of the tax year
  3. Six years from the end of the accounting period
  4. Five years from 31 January after the tax year Correct answer.

Explanation

A self-employed individual must keep business records for five years after 31 January following the end of the tax year. This supports the figures reported in the self assessment return.

Question 10The UK tax system and its administration

By what date must a company file its corporation tax return for an accounting period?

  1. Twelve months after the end of the accounting period Correct answer.
  2. Six months after the end of the accounting period
  3. Nine months after the end of the accounting period
  4. Eighteen months after the end of the accounting period

Explanation

A company must file its corporation tax return within twelve months of the end of the accounting period. The tax itself is generally due earlier.

Question 11The UK tax system and its administration

When is corporation tax payable by a company that is not liable to pay by quarterly instalments?

  1. Six months and thirteen days after the end of the accounting period
  2. Nine months and one day after the end of the accounting period Correct answer.
  3. Twelve months after the end of the accounting period
  4. Nine months after the end of the accounting period

Explanation

A company that is not liable to quarterly instalments pays corporation tax nine months and one day after the end of its accounting period. Its return is not due until twelve months after the period end.

Question 12The UK tax system and its administration

A company has augmented profits of £25 million for a twelve-month accounting period beginning on 1 January 2024. When is its first quarterly instalment due?

  1. Two months and thirteen days after the start of the accounting period Correct answer.
  2. Nine months and thirteen days after the start of the accounting period
  3. Six months and thirteen days after the start of the accounting period
  4. Nine months and one day after the start of the accounting period

Explanation

A very large company, with augmented profits above £20 million, pays its first quarterly instalment two months and thirteen days after the start of the accounting period. Smaller large companies start at six months and thirteen days.

Question 13The UK tax system and its administration

By what date is a standard quarterly VAT return and payment due?

  1. Two months after the period end
  2. Seven days after the period end
  3. One month and seven days after the period end Correct answer.
  4. One month and fourteen days after the end of the period

Explanation

A VAT return and payment are due one month and seven days after the end of the VAT accounting period. This applies to standard quarterly VAT periods.

Question 14The UK tax system and its administration

What is the current VAT registration threshold for taxable turnover in a rolling twelve-month period?

  1. £100,000
  2. £90,000 Correct answer.
  3. £88,000
  4. £85,000

Explanation

The VAT registration threshold is £90,000 of taxable turnover in any rolling twelve-month period. A business must register once it exceeds that threshold.

Question 15The UK tax system and its administration

An employer with 60 employees files its first late full payment submission for a tax month. What penalty applies?

  1. £100
  2. £400
  3. £300 Correct answer.
  4. £200

Explanation

Late filing penalties for RTI are charged monthly and depend on the number of employees. For 50 to 249 employees the penalty is £300 per late filing.

Question 16The UK tax system and its administration

What is the normal time limit for HMRC to give notice of a compliance check into an individual's self assessment return?

  1. Six years after the return is filed
  2. Four years after the end of the tax year
  3. Twelve months after the end of the tax year
  4. Twelve months after the return is filed Correct answer.

Explanation

HMRC must normally give notice of a compliance check into a self assessment return within twelve months after the return is filed. A later discovery assessment may be possible in limited circumstances.

Question 17The UK tax system and its administration

HMRC discovers an underpayment of income tax caused by careless behaviour. What is the normal time limit for making a discovery assessment?

  1. Twelve months after the return was filed
  2. Twenty years after the end of the tax year
  3. Six years after the end of the tax year
  4. Four years after the end of the tax year Correct answer.

Explanation

For careless behaviour, a discovery assessment may be made within four years after the end of the tax year. The twenty-year limit applies only where the underpayment is due to deliberate behaviour.

Question 18The UK tax system and its administration

What is the maximum penalty for a careless error in a tax return that results in an underpayment?

  1. 20% to 70% of the potential lost revenue
  2. Nil
  3. 30% to 100% of the potential lost revenue
  4. Up to 30% of the potential lost revenue Correct answer.

Explanation

A careless error attracts a penalty of up to 30% of the potential lost revenue. Higher ranges apply to deliberate errors and to deliberate errors that are concealed.

Question 19The UK tax system and its administration

Which of the following is most likely to be accepted as a reasonable excuse for late filing?

  1. Reliance on a paid tax agent who forgot the deadline
  2. Ignorance of the filing deadline
  3. A serious illness that prevented the taxpayer from dealing with their affairs Correct answer.
  4. Lack of money to pay the tax due

Explanation

A serious illness that prevents a taxpayer from dealing with their tax affairs can be a reasonable excuse. Reliance on an agent, ignorance of the law and lack of funds are generally not accepted.

Question 20The UK tax system and its administration

A statutory review upholds HMRC's decision. Within what period may the taxpayer notify an appeal to the First-tier Tribunal?

  1. 45 days
  2. 90 days
  3. 30 days Correct answer.
  4. 60 days

Explanation

After a statutory review upholds HMRC's decision, the taxpayer has 30 days from the review conclusion to notify an appeal to the First-tier Tribunal. A different 30-day period applies to requesting the review.

Question 21The UK tax system and its administration

To which body may a taxpayer appeal a decision of the First-tier Tribunal on a point of law?

  1. First-tier Tribunal
  2. Court of Appeal
  3. High Court
  4. Upper Tribunal Correct answer.

Explanation

An appeal from the First-tier Tribunal on a point of law lies to the Upper Tribunal. Further appeals may reach the Court of Appeal.

Question 22The UK tax system and its administration

How is interest paid by HMRC on an overpayment of income tax treated for the recipient?

  1. It is exempt from tax
  2. It is taxable as savings income Correct answer.
  3. It is taxable as trading income
  4. It is deducted from the tax liability

Explanation

Interest paid by HMRC on an overpayment of income tax is taxable as savings income for the recipient. It is not exempt and is not treated as trading income.

Question 23The UK tax system and its administration

A sole trader is charged late payment interest by HMRC on unpaid income tax. How is that interest treated for income tax purposes?

  1. Deductible as a management expense
  2. Not deductible Correct answer.
  3. Deductible as a trading expense
  4. Deductible against savings income only

Explanation

Late payment interest charged by HMRC on unpaid income tax is not an allowable deduction for income tax purposes. It is a personal charge, not a trading or management expense.

Question 24The UK tax system and its administration

What is the main obligation imposed by the disclosure of tax avoidance schemes rules?

  1. Promoters must disclose notifiable avoidance schemes to HMRC Correct answer.
  2. Schemes must be registered at Companies House
  3. Taxpayers must obtain HMRC approval before using a scheme
  4. HMRC must publish a list of all tax schemes

Explanation

Under the disclosure of tax avoidance schemes rules, promoters of notifiable tax avoidance schemes must disclose them to HMRC. The scheme is then given a reference number, which users may need to report.

Question 25The UK tax system and its administration

Under the general anti-abuse rule, within what period may a taxpayer make representations after HMRC gives notice of a proposed counteraction?

  1. 30 days
  2. 90 days
  3. 60 days
  4. 45 days Correct answer.

Explanation

After HMRC gives notice of a proposed general anti-abuse rule counteraction, the taxpayer has 45 days to make representations. The advisory panel then gives an opinion before HMRC decides whether to counteract.

Question 26The UK tax system and its administration

By what date must a sole trader notify HMRC that they are liable to income tax on a new business?

  1. 31 October after the end of the relevant tax year
  2. 31 January after the end of the relevant tax year
  3. 5 April after the end of the relevant tax year
  4. 5 October after the end of the relevant tax year Correct answer.

Explanation

A person who becomes liable to income tax must notify chargeability to HMRC within six months after the end of the tax year concerned. This gives a notification deadline of 5 October following the end of the relevant tax year. Failure to notify can lead to tax-geared penalties.

Question 27The UK tax system and its administration

An individual completes the sale of a UK residential property on 15 June 2025 and makes a chargeable gain. By what date must the individual report the disposal and pay the capital gains tax?

  1. 31 October 2025
  2. 31 January 2026
  3. 14 August 2025 Correct answer.
  4. 31 July 2025

Explanation

A chargeable gain on a UK residential property disposal by an individual must be reported on a property return, and the related capital gains tax paid, within 60 days after completion. Counting 60 days from 15 June 2025 gives 14 August 2025. The self assessment filing date does not replace this earlier property return deadline.

Question 28The UK tax system and its administration

An individual deliberately conceals an underpayment of income tax in a self assessment return. HMRC raises a penalty based on the potential lost revenue. What is the maximum penalty rate for deliberate and concealed behaviour?

  1. 30% of the potential lost revenue
  2. 100% of the potential lost revenue Correct answer.
  3. 70% of the potential lost revenue
  4. 200% of the potential lost revenue

Explanation

The penalty for an inaccuracy in a tax return is tax-geared and depends on the behaviour involved. For deliberate and concealed behaviour, the maximum penalty is 100% of the potential lost revenue. The maximum is lower for careless behaviour or for deliberate but unconcealed behaviour.

Question 29The UK tax system and its administration

For 2024/25, what is the maximum amount of trading income that can be covered by the trading allowance?

  1. £12,570
  2. £7,500
  3. £2,000
  4. £1,000 Correct answer.

Explanation

The trading allowance exempts the first £1,000 of income from a trade or from miscellaneous transactions, so no tax or NIC arises on that amount. If the allowance is claimed, no deduction can be made for actual expenses. The relief is not available where the income is already taxed under PAYE.

Question 30The UK tax system and its administration

For 2024/25, what is the annual exempt amount available to an individual for capital gains tax purposes?

  1. £1,000
  2. £3,000 Correct answer.
  3. £12,300
  4. £6,000

Explanation

The annual exempt amount for 2024/25 is £3,000 per individual, having been reduced from £6,000 in 2023/24. It is deducted from chargeable gains after losses have been relieved. It cannot be carried forward if unused.

Question 31The UK tax system and its administration

For 2024/25, what is the amount of dividends that falls within the dividend nil rate band?

  1. £1,000
  2. £2,000
  3. £5,000
  4. £500 Correct answer.

Explanation

The dividend nil rate band was reduced to £500 for 2024/25, so the first £500 of dividend income is taxed at 0%. The band still uses up part of the basic and higher rate bands. Dividends above the band are taxed at 8.75%, 33.75% or 39.35% depending on the taxpayer's marginal band.

Question 32The UK tax system and its administration

An individual must file a 2024/25 self-assessment tax return online. What is the filing deadline?

  1. 31 October 2025
  2. 5 April 2026
  3. 31 January 2026 Correct answer.
  4. 31 December 2025

Explanation

Online returns for a tax year must be filed by 31 January following the end of that year, so the 2024/25 return is due by 31 January 2026. The same date is the deadline for paying any balancing tax. A paper return would instead be due by 31 October 2025.

Question 33The UK tax system and its administration

For 2024/25, what is the width of the basic rate band of income tax for a taxpayer born in 1980?

  1. £12,570
  2. £125,140
  3. £50,270
  4. £37,700 Correct answer.

Explanation

The basic rate band for 2024/25 is £37,700, and taxable income within it is charged at 20%. The band can be extended by Gift Aid donations and personal pension contributions made net. It sits above the personal allowance, so the higher rate threshold is £50,270 for an individual with a full allowance.

Question 34The UK tax system and its administration

An individual lets a furnished room in her only home to a lodger and receives £7,200 of rent in 2024/25. What is the maximum rent-a-room relief she can claim?

  1. £1,000
  2. £6,000
  3. £7,500 Correct answer.
  4. £4,250

Explanation

Rent-a-room relief exempts up to £7,500 of gross rent where the taxpayer lets furnished accommodation in their only or main home. Her £7,200 is therefore fully covered and no tax arises, with no need to deduct expenses. The limit is halved to £3,750 where the relief is shared.

Question 35The UK tax system and its administration

A married couple both born in 1960 elect to transfer the marriage allowance for 2024/25. What is the tax reducer available to the recipient spouse?

  1. £250
  2. £1,260
  3. £500
  4. £252 Correct answer.

Explanation

The marriage allowance transfers £1,260 of the transferor's personal allowance to the recipient, who receives a tax reducer equal to 20% of that amount, i.e. £252. The transferor must have income below the personal allowance and the recipient must be a basic rate taxpayer. The reducer is deducted from the recipient's income tax liability after other reliefs.

Question 36The UK tax system and its administration

A higher rate taxpayer makes a disposal in 2024/25 that qualifies for business asset disposal relief. What rate of capital gains tax applies to the qualifying gain?

  1. 24%
  2. 18%
  3. 10% Correct answer.
  4. 20%

Explanation

Gains qualifying for business asset disposal relief are charged at 10% up to the lifetime limit of £1 million. This rate survived the increase in the main capital gains tax rates to 18% and 24% from April 2024. Any gain above the remaining lifetime limit is taxed at the normal rates for the taxpayer.

Question 37The UK tax system and its administration

In 2024/25, an individual has adjusted net income of £112,000. What personal allowance is available to her?

  1. £0
  2. £9,570
  3. £6,570 Correct answer.
  4. £12,570

Explanation

The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000. Her excess is £12,000, giving a reduction of £6,000, so the allowance falls to £6,570. The allowance would be eliminated entirely at £125,140.

Question 38The UK tax system and its administration

An employee is paid a salary of £60,000 in 2024/25 and has no other income or benefits. What is his Class 1 primary national insurance contribution liability?

  1. £948.60
  2. £3,210.60 Correct answer.
  3. £3,794.40
  4. £3,016.00

Explanation

Employee Class 1 NIC is charged at 8% on earnings between the primary threshold of £12,570 and £50,270, giving £3,016. Above £50,270 the rate falls to 2%, giving £194.60 on £9,730. The total is therefore £3,210.60.

Question 39The UK tax system and its administration

An employer pays a single employee a salary of £45,000 in 2024/25 and is not eligible for the employment allowance. What is the employer's Class 1 secondary national insurance liability?

  1. £5,682.00
  2. £4,954.20 Correct answer.
  3. £6,210.00
  4. £4,475.34

Explanation

Employer Class 1 NIC is charged at 13.8% on earnings above the secondary threshold of £9,100. The chargeable amount is therefore £35,900, giving £4,954.20. The employee's personal allowance is irrelevant to the employer's liability.

Question 40The UK tax system and its administration

A self-employed individual has taxable trading profits of £58,000 in 2024/25 and no other income. What is his Class 4 national insurance liability?

  1. £2,416.60 Correct answer.
  2. £3,480.00
  3. £2,262.00
  4. £2,725.80

Explanation

Class 4 NIC is charged at 6% on profits between £12,570 and £50,270, giving £2,262. Profits above £50,270 bear 2%, giving £154.60 on £7,730. The total liability is £2,416.60.

Question 41The UK tax system and its administration

In 2024/25 an individual has employment income of £30,000 and receives dividends of £20,000. What is the income tax payable on the dividends?

  1. £3,375.00
  2. £1,750.00
  3. £1,312.50
  4. £1,706.25 Correct answer.

Explanation

The first £500 of dividends is covered by the dividend nil rate band, leaving £19,500 taxable. Her basic rate band has £20,270 unused after the salary, so all the remaining dividends fall within the basic rate band at 8.75%. The tax is £19,500 × 8.75% = £1,706.25.

Question 42The UK tax system and its administration

In 2024/25 an individual has employment income of £40,000 and receives bank interest of £1,500. What is the income tax payable on the interest?

  1. £0
  2. £300
  3. £100 Correct answer.
  4. £500

Explanation

A basic rate taxpayer is entitled to a personal savings allowance of £1,000, so only £500 of the interest is taxable. As the whole amount remains within the basic rate band it is taxed at 20%. The tax is therefore £500 × 20% = £100.

Question 43The UK tax system and its administration

In 2024/25 an individual realises chargeable gains of £30,000. She has unused brought-forward capital losses of £10,000 and makes a current year capital loss of £4,000. She wishes to use her annual exempt amount in full. What is her taxable gain?

  1. £23,000
  2. £17,000
  3. £13,000 Correct answer.
  4. £16,000

Explanation

Current year capital losses must be set against gains of the same year as far as possible, leaving £26,000. Brought-forward losses are then used to reduce the gain to the level of the annual exempt amount, so £10,000 is deducted, and the £3,000 exemption is applied. The taxable gain is £26,000 − £10,000 − £3,000 = £13,000.

Question 44The UK tax system and its administration

An individual owned and occupied her only home for 7 years, then let it out for 3 years before selling it at the end of the tenth year. What proportion of the gain qualifies for private residence relief?

  1. 77.5% Correct answer.
  2. 70%
  3. 90%
  4. 75%

Explanation

Private residence relief covers the periods of actual occupation plus the final 9 months of ownership, whatever the use in that period. Her qualifying period is therefore 7 years plus 0.75 years, i.e. 7.75 years out of 10. The exempt proportion is 77.5% of the gain.

Question 45The UK tax system and its administration

Which of the following shareholdings would qualify for gift relief if gifted to the donor's adult daughter?

  1. Shares listed on the London Stock Exchange
  2. Shares in a quoted property investment company
  3. Shares owned for at least two years
  4. Shares in an unquoted trading company Correct answer.

Explanation

Gift relief requires the asset to be shares in a trading company whose shares are not listed on a recognised stock exchange, so that the gain can be held over. Both parties must claim, and the donee takes the donor's base cost. There is no minimum holding period for the relief.

Question 46The UK tax system and its administration

An individual transferred shares costing £20,000 to her spouse when they were worth £50,000. The spouse later sold them for £80,000. What gain arises to the spouse on the sale?

  1. £30,000
  2. £77,000
  3. £57,000
  4. £60,000 Correct answer.

Explanation

Transfers between spouses and civil partners living together are on a no gain, no loss basis, so the transfer itself triggers no gain. The receiving spouse inherits the transferor's original cost of £20,000. The gain on the later sale is therefore £80,000 − £20,000 = £60,000.

Question 47The UK tax system and its administration

A sole trader's income tax and Class 4 national insurance liability for 2023/24 was £12,000, all settled through payments on account and a balancing payment. What is the amount of each payment on account for 2024/25?

  1. £4,000
  2. £12,000
  3. £3,000
  4. £6,000 Correct answer.

Explanation

Each payment on account is half of the previous year's relevant tax liability, where that liability exceeds £1,000 and less than 80% was collected at source. Half of £12,000 is £6,000. The two payments are due on 31 January 2026 and 31 July 2026.

Question 48The UK tax system and its administration

In 2024/25 an individual has adjusted income of £300,000 and threshold income of £250,000. What is her annual allowance for pension contributions?

  1. £20,000
  2. £40,000 Correct answer.
  3. £60,000
  4. £10,000

Explanation

Because threshold income exceeds £200,000 and adjusted income exceeds £260,000, the annual allowance is tapered down from £60,000. The reduction is £1 for every £2 of adjusted income above £260,000, i.e. £20,000 on the £40,000 excess. The allowance is therefore £40,000.

Question 49The UK tax system and its administration

In 2024/25 an individual sold a painting, which is not a wasting asset, for £8,000. It had cost £2,000. What is the chargeable gain before the annual exempt amount?

  1. £6,000
  2. £2,000
  3. £5,000
  4. £3,333 Correct answer.

Explanation

A chattel sold for more than £6,000 is taxable, but marginal relief restricts the gain to five thirds of the excess of proceeds over £6,000. That gives 5/3 × £2,000 = £3,333, which is lower than the unrelieved gain of £6,000. The restricted figure is therefore the chargeable gain.

Question 50The UK tax system and its administration

On 10 January 2025 an individual sold 1,500 shares in Z plc for £12,000. She already held 1,000 shares in the share pool with a cost of £3,000 and, on 30 January 2025, she bought 600 shares for £4,800. What is her chargeable gain on the disposal?

  1. £7,200
  2. £4,500 Correct answer.
  3. £4,200
  4. £9,000

Explanation

Disposals are matched first with acquisitions made in the following 30 days, so 600 shares are matched with the 30 January purchase: proceeds of £4,800 against a cost of £4,800, giving no gain. The remaining 900 shares come from the share pool: proceeds of £7,200 against a pooled cost of £2,700. The chargeable gain is therefore £4,500.