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ACCA TX-UK study materials
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ACCA TX-UK practice questions

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Question 1Tax system and administration (UK)

For how long after the end of a tax year must an individual normally keep records supporting a self assessment return?

  1. Ten years
  2. Three years
  3. One year
  4. Five years Correct answer.

Explanation

Individuals must generally retain records to support a self assessment return for five years after the end of the tax year to which the return relates. This allows HMRC to check the return within the normal enquiry window.

Question 2Tax system and administration (UK)

What is the standard deadline for an individual to file a paper self assessment tax return for a tax year?

  1. 31 October following the tax year Correct answer.
  2. 5 April following the tax year
  3. 31 March following the tax year
  4. 31 January following the tax year

Explanation

Paper returns must be submitted by 31 October following the end of the tax year. Online returns have a later deadline of 31 January.

Question 3Tax system and administration (UK)

By what date must an individual usually pay the balancing payment of income tax for the tax year 2023/24?

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

Explanation

The balancing payment for a tax year is due on 31 January following the end of that tax year. For 2023/24 this is 31 January 2025.

Question 4Tax system and administration (UK)

An individual's income tax liability for 2023/24 is £9,000 and tax deducted at source was £2,000. What is each payment on account for 2024/25?

  1. £2,000
  2. £1,750
  3. £3,500 Correct answer.
  4. £4,500

Explanation

Payments on account are each half of the previous year's net liability, being the liability less tax already deducted at source. Here (£9,000 − £2,000) ÷ 2 = £3,500.

Question 5Tax system and administration (UK)

Which body hears appeals against certain decisions of HMRC where the matter has not been settled by internal review?

  1. The First-tier Tribunal Correct answer.
  2. The House of Lords
  3. The Supreme Court
  4. The Bank of England

Explanation

Unresolved appeals against HMRC decisions go to the First-tier Tribunal (Tax Chamber). It is the first independent judicial stage in the tax appeals process.

Question 6Tax system and administration (UK)

What is the normal period within which HMRC may open an enquiry into a correct and complete self assessment return?

  1. Six months after the filing date
  2. Nine months after the filing date
  3. Twelve months after the filing date Correct answer.
  4. Two years after the filing date

Explanation

HMRC normally has twelve months from the filing date (or the actual filing date if later) to open an enquiry into a return. Different rules apply where a return is incomplete or fraudulent.

Question 7Tax system and administration (UK)

A trader's self assessment return was filed late. Which penalty applies to a return submitted three months after the filing date?

  1. A fixed £100 penalty only Correct answer.
  2. A penalty of 5% of the tax due
  3. A £300 penalty plus a daily penalty
  4. No penalty if the tax is paid on time

Explanation

A return filed up to three months late attracts an initial fixed £100 penalty. Further penalties accrue only if the delay continues beyond three months.

Question 8Tax system and administration (UK)

Which of the following is the standard rate of VAT in the UK?

  1. 5%
  2. 20% Correct answer.
  3. 0%
  4. 12.5%

Explanation

The standard rate of VAT in the UK is 20%. Reduced-rate supplies are charged at 5% and zero-rated supplies at 0%.

Question 9Tax system and administration (UK)

What is the current registration threshold for VAT that applies to a business's taxable turnover?

  1. £100,000
  2. £70,000
  3. £90,000
  4. £85,000 Correct answer.

Explanation

A business must register for VAT once its taxable turnover exceeds the registration threshold, which is £85,000. Registration can also be voluntary below that level.

Question 10Tax system and administration (UK)

A VAT-registered business makes only standard-rated supplies. Which document must it normally issue to a customer to support the customer's input tax claim?

  1. A delivery note
  2. A statement of account
  3. A credit note
  4. A valid VAT invoice Correct answer.

Explanation

A VAT invoice is the document that supports a claim for input tax by a VAT-registered customer. It must contain the prescribed particulars.

Question 11Tax system and administration (UK)

Which of the following is a zero-rated supply for VAT purposes?

  1. Hotel accommodation
  2. Most food intended for human consumption Correct answer.
  3. Adult clothing
  4. Domestic electricity

Explanation

Most food for human consumption is zero-rated, subject to exclusions such as catering. Domestic fuel and power is reduced-rated and hotel accommodation is standard-rated.

Question 12Tax system and administration (UK)

An individual has been resident in the UK for many years and leaves permanently on 1 August to live abroad. Under the statutory residence test, which factor is most relevant to whether the individual becomes non-UK resident?

  1. The country to which the individual moves
  2. Whether the individual owns UK property
  3. The individual's nationality
  4. The number of days spent in the UK in the tax year Correct answer.

Explanation

The statutory residence test is based primarily on the number of days spent in the UK, combined with ties and previous residence status. Nationality and destination country are not determinative.

Question 13Tax system and administration (UK)

Which of the following best describes the purpose of the PAYE system?

  1. To collect income tax and Class 1 NIC through employers Correct answer.
  2. To collect inheritance tax on estates
  3. To collect VAT from consumers
  4. To administer corporation tax instalments

Explanation

PAYE requires employers to deduct income tax and Class 1 NIC from wages and pay them to HMRC. It is a collection mechanism for employment income.

Question 14Tax system and administration (UK)

An employer pays an employee £3,000 gross in a month. What is the employer required to do under PAYE?

  1. Pay the gross amount and report annually only
  2. Deduct only Class 4 NIC
  3. Deduct income tax and Class 1 NIC and pay to HMRC Correct answer.
  4. Withhold VAT on the salary

Explanation

Under PAYE, the employer deducts income tax and Class 1 primary NIC from the employee's pay and accounts for these to HMRC. The employer also pays secondary NIC.

Question 15Tax system and administration (UK)

Which of the following is a duty of an employer under the PAYE regulations?

  1. To file the employee's personal tax return
  2. To calculate each employee's self assessment liability
  3. To provide employees with a payslip showing deductions Correct answer.
  4. To pay the employee's Class 2 NIC

Explanation

Employers must give employees a payslip showing pay and deductions, and must operate PAYE correctly. Calculating self assessment liabilities and filing returns are the employee's own responsibilities.

Question 16Tax system and administration (UK)

Which of the following is the main tax administered by HMRC on the profits of a company?

  1. Inheritance tax
  2. Corporation tax Correct answer.
  3. Capital gains tax
  4. Income tax

Explanation

Companies pay corporation tax on their taxable profits. Individuals pay income tax and capital gains tax, and inheritance tax applies to estates and transfers.

Question 17Tax system and administration (UK)

What is the standard deadline for a company to file its corporation tax return (CT600) for an accounting period?

  1. Three months after the end of the accounting period
  2. Six months after the end of the accounting period
  3. Twelve months after the end of the accounting period Correct answer.
  4. Nine months and one day 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. Tax is generally payable earlier, nine months and one day after the period end.

Question 18Tax system and administration (UK)

A company has taxable profits of £500,000 and pays corporation tax at the main rate. What is its corporation tax liability?

  1. £100,000
  2. £150,000
  3. £95,000
  4. £125,000 Correct answer.

Explanation

The main rate of corporation tax is 25% for profits above the upper limit, so £500,000 × 25% = £125,000. Marginal relief applies only between the lower and upper limits.

Question 19Tax system and administration (UK)

Which of the following best describes the role of the tax year in the UK tax system?

  1. It fixes the rate of inheritance tax
  2. It defines the period for which income tax and capital gains tax are assessed Correct answer.
  3. It determines the company's accounting reference date
  4. It sets the date on which VAT returns are due

Explanation

The tax year (6 April to 5 April) is the period for which individuals' income tax and capital gains tax liabilities are computed. Companies use accounting periods instead.

Question 20Tax system and administration (UK)

An individual receives a notice to file a self assessment return but has no tax to pay and no other reason to complete one. What is the individual's position?

  1. No return is needed because no tax is due
  2. The individual may ignore the notice
  3. A return must still be filed unless HMRC agrees it is not required Correct answer.
  4. A return must be filed only if income exceeds the personal allowance

Explanation

Once HMRC issues a notice to file, a return is legally required even if no tax is payable, unless HMRC withdraws the notice. Ignoring the notice can lead to penalties.

Question 21Tax system and administration (UK)

Which of the following penalties may apply where an individual deliberately withholds information from HMRC, causing an understatement of tax?

  1. No penalty if the tax is later paid
  2. A penalty of 5% of the tax paid
  3. A penalty of up to 100% of the potential lost revenue Correct answer.
  4. A fixed £100 penalty only

Explanation

Deliberate behaviour that understates tax can attract a penalty of up to 100% of the potential lost revenue. The level within that range depends on the behaviour and cooperation.

Question 22Tax system and administration (UK)

Which of the following is a characteristic of the self assessment system for individuals?

  1. The bank reports all income to HMRC on the taxpayer's behalf
  2. The taxpayer is responsible for calculating and reporting the tax due Correct answer.
  3. HMRC calculates the tax for all taxpayers
  4. The employer calculates the taxpayer's total liability

Explanation

Self assessment places the primary responsibility on the taxpayer to calculate and report the correct tax. HMRC checks returns but does not compute every liability.

Question 23Tax system and administration (UK)

A VAT-registered business has taxable turnover below the deregistration threshold. What is the business's position regarding VAT registration?

  1. It must remain registered permanently
  2. It may apply to deregister if turnover falls below the threshold Correct answer.
  3. It must immediately stop charging VAT without applying
  4. It must register again the following year

Explanation

A business whose taxable turnover falls below the deregistration threshold may apply to deregister. It is not obliged to remain registered indefinitely.

Question 24Tax system and administration (UK)

Which of the following is the correct treatment for a business that makes both standard-rated and exempt supplies and wishes to recover input tax?

  1. It must apportion input tax and recover only the attributable part Correct answer.
  2. It may recover no input tax at all
  3. It must charge VAT on the exempt supplies
  4. It may recover all input tax in full

Explanation

A partially exempt business must apportion input tax between taxable and exempt use and can recover only the attributable taxable portion. Full recovery applies only to wholly taxable businesses.

Question 25Tax system and administration (UK)

Which of the following best describes the function of a payment on account in the self assessment system?

  1. An advance payment towards the current year's tax based on the prior year Correct answer.
  2. A refund of overpaid tax
  3. A final settlement of the tax liability
  4. A penalty for late payment

Explanation

Payments on account are advance payments towards the current year's liability, normally based on the previous year's net liability. They are made twice a year.

Question 26Tax system and administration (UK)

Which body hears appeals against certain decisions of HMRC on tax matters, such as penalty assessments and VAT assessments?

  1. The Magistrates' Court
  2. The Prudential Regulation Authority
  3. The Office of Tax Simplification
  4. The First-tier Tribunal (Tax Chamber) Correct answer.

Explanation

Appeals against HMRC decisions on tax matters are heard by the First-tier Tribunal (Tax Chamber), with a further right of appeal to the Upper Tribunal. The tribunal is independent of HMRC.

Question 27Tax system and administration (UK)

An individual disagrees with an HMRC decision and wishes to appeal. What must the individual normally do first?

  1. Write to the individual's MP to request intervention
  2. Request an internal review of the decision by HMRC Correct answer.
  3. Apply directly to the High Court for judicial review
  4. Publish the dispute in a national newspaper

Explanation

Before appealing to the tribunal, a taxpayer may request an internal review by HMRC, and the review decision carries a right of appeal. This gives HMRC a chance to reconsider its position.

Question 28Tax system and administration (UK)

A taxpayer makes a late appeal to the First-tier Tribunal without a reasonable excuse. Which statement best describes the tribunal's power?

  1. It may extend the time limit if it considers it fair and just to do so Correct answer.
  2. It must automatically reject any late appeal
  3. It must refer the case to the High Court
  4. It can only hear the appeal if HMRC agrees in writing

Explanation

The tribunal has discretion to extend time for a late appeal where it is fair and just to do so, considering factors such as the length of delay and reasons for it. It is not obliged to refuse.

Question 29Tax system and administration (UK)

Which of the following best describes the role of the Low Incomes Tax Reform Group?

  1. It represents the interests of unrepresented low-income taxpayers in the tax system Correct answer.
  2. It sets the rates of income tax each year
  3. It collects tax on behalf of HMRC from low-income taxpayers
  4. It audits the accounts of small businesses

Explanation

The Low Incomes Tax Reform Group is an initiative of the Chartered Institute of Taxation that works to improve the tax system for those on low incomes and those unable to afford professional advice. It does not collect tax or set rates.

Question 30Tax system and administration (UK)

Which of the following is the main purpose of the HMRC Charter?

  1. To set the deadline for filing partnership returns
  2. To provide the detailed computation of income tax liabilities
  3. To list the criminal offences available to HMRC
  4. To set out the rights and obligations of taxpayers and the standards of service they can expect Correct answer.

Explanation

The HMRC Charter sets out what taxpayers can expect from HMRC and what HMRC expects from taxpayers. It covers rights, obligations and standards of behaviour and service.

Question 31Tax system and administration (UK)

Under the HMRC Charter, which of the following is a taxpayer's responsibility?

  1. To calculate HMRC's budget for the year
  2. To publish HMRC's performance statistics
  3. To keep accurate records and provide correct information Correct answer.
  4. To appoint HMRC's senior officials

Explanation

The Charter requires taxpayers to be honest and to keep accurate records and provide correct information. These duties support the self assessment system.

Question 32Tax system and administration (UK)

Which of the following best describes the function of the Compliance Handbook published by HMRC?

  1. It provides HMRC staff with guidance on how compliance and enforcement powers are applied Correct answer.
  2. It sets the rates of national insurance contributions
  3. It is the legislation that imposes income tax
  4. It is the annual report of the tax tribunal

Explanation

HMRC's Compliance Handbook is internal guidance explaining how HMRC applies compliance and enforcement rules, and it is publicly available for transparency. It is guidance, not legislation.

Question 33Tax system and administration (UK)

A taxpayer wants to rely on an HMRC published statement of practice. Which statement is correct?

  1. Published guidance overrides the Finance Act
  2. Published guidance has the force of statute in all circumstances
  3. Published guidance can be ignored by HMRC at will
  4. HMRC is generally expected to apply its published guidance consistently, though it is not legislation Correct answer.

Explanation

HMRC publishes guidance to explain how it interprets and applies the law, and taxpayers can generally expect it to be applied consistently. Guidance does not, however, have the force of statute.

Question 34Tax system and administration (UK)

Which of the following is the standard deadline by which an individual must notify HMRC of a new source of income chargeable to income tax that is not taxed under PAYE?

  1. Within three months of the end of the tax year
  2. Within 30 days of receiving the income
  3. By 31 January following the end of the tax year
  4. By 5 October following the end of the tax year Correct answer.

Explanation

An individual with new taxable income not covered by PAYE must notify chargeability to HMRC by 5 October following the end of the tax year, unless a return has already been issued.

Question 35Tax system and administration (UK)

An individual started receiving rental income in the tax year 2024/25 and has not been sent a self assessment return. By what date must the individual notify HMRC of the chargeability?

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

Explanation

Notification must be made by 5 October following the end of the tax year in which the income arose. For 2024/25 this is 5 October 2025.

Question 36Tax system and administration (UK)

Which of the following best describes the records an individual must keep to support a self assessment return?

  1. Only bank statements for the final month of the tax year
  2. Records sufficient to enable the return to be completed correctly, kept for a set period Correct answer.
  3. Only documents requested by HMRC in writing
  4. Only receipts for purchases over £100

Explanation

Taxpayers must keep sufficient records to enable a correct return to be made, and these must generally be retained for a defined period after the filing deadline. The obligation is not limited to particular documents.

Question 37Tax system and administration (UK)

An individual keeps business records for a self assessment return for the tax year 2023/24. What is the usual minimum period for which these records must be retained after the filing deadline?

  1. Ten years
  2. One year
  3. Five years Correct answer.
  4. Six months

Explanation

Records supporting a self assessment return must generally be kept for five years after the 31 January following the end of the tax year. This allows HMRC to check the return.

Question 38Tax system and administration (UK)

Which of the following best describes the role of an accountant acting as agent for a client in dealings with HMRC?

  1. The agent becomes personally liable for the client's tax
  2. The agent replaces the client as the taxpayer
  3. The agent can act for the client if properly authorised, with the client remaining liable Correct answer.
  4. The agent can decide the client's tax liability without reference to the law

Explanation

An agent can be authorised to deal with HMRC on the client's behalf, but the client remains responsible for the accuracy of returns and for paying tax. Authorisation does not transfer liability.

Question 39Tax system and administration (UK)

Which of the following must a taxpayer normally provide to HMRC so that an accountant can deal with the taxpayer's affairs as agent?

  1. A statement of the taxpayer's employment history
  2. A written authority or form of authorisation Correct answer.
  3. A bank guarantee for the tax
  4. A copy of the taxpayer's passport

Explanation

HMRC requires formal authorisation, typically through the agent authorisation service or a signed form, before it will deal with an agent. The taxpayer remains responsible for the affairs.

Question 40Tax system and administration (UK)

An individual has a dispute with HMRC about a penalty and has requested an internal review. The review upholds the penalty. Which of the following is the individual's next step?

  1. Appeal to the First-tier Tribunal within the permitted time Correct answer.
  2. Apply to HMRC to cancel the penalty without appeal
  3. Refer the matter to the Financial Conduct Authority
  4. Pay the penalty and take no further action

Explanation

Where an internal review upholds a decision, the taxpayer may appeal to the First-tier Tribunal within the time limit specified in the review conclusion letter. The review is not the final stage.

Question 41Income tax and NIC on individuals (UK)

For the tax year 2024/25, what is the standard personal allowance available to an individual with adjusted net income below £100,000?

  1. £13,250
  2. £12,500
  3. £11,850
  4. £12,570 Correct answer.

Explanation

The personal allowance for 2024/25 is £12,570. It is reduced by £1 for every £2 of adjusted net income above £100,000, so a full allowance is available below that threshold.

Question 42Income tax and NIC on individuals (UK)

An employee earns a salary of £30,000 and receives no other income. What rate of income tax applies to the portion of salary above the personal allowance but within the basic rate band?

  1. 45%
  2. 20% Correct answer.
  3. 0%
  4. 40%

Explanation

Taxable income within the basic rate band is charged at 20%. The basic rate band for 2024/25 runs from £0 to £37,700 of taxable income.

Question 43Income tax and NIC on individuals (UK)

Which class of National Insurance contributions is payable by a self-employed individual on their profits?

  1. Class 1A
  2. Class 1
  3. Class 3
  4. Class 2 and Class 4 Correct answer.

Explanation

Self-employed individuals pay Class 2 and Class 4 NIC on their profits. Class 1 is paid by employees, Class 1A on benefits, and Class 3 is voluntary.

Question 44Income tax and NIC on individuals (UK)

A taxpayer makes a gift aid donation of £400 (net) to charity. What amount is treated as the gross contribution for tax purposes?

  1. £400
  2. £480
  3. £320
  4. £500 Correct answer.

Explanation

Gift aid donations are treated as made net of basic rate tax, so the gross amount is the net payment multiplied by 100/80. £400 × 100/80 = £500.

Question 45Income tax and NIC on individuals (UK)

An individual has adjusted net income of £110,000. By how much is their personal allowance reduced?

  1. £12,570
  2. £10,000
  3. £5,000 Correct answer.
  4. £2,500

Explanation

The allowance is reduced by £1 for every £2 of adjusted net income above £100,000. Excess of £10,000 ÷ 2 = £5,000 reduction.

Question 46Income tax and NIC on individuals (UK)

Which of the following is a taxable employment benefit that must be reported on a P11D?

  1. A private medical insurance premium paid by the employer Correct answer.
  2. A statutory redundancy payment
  3. Reimbursement of business travel actually incurred
  4. Employer's contribution to a registered pension scheme

Explanation

Private medical insurance paid by the employer is a taxable benefit reported on form P11D. Employer pension contributions and reimbursed business expenses are not taxable benefits.

Question 47Income tax and NIC on individuals (UK)

An employee is provided with a company car with a list price of £20,000 and a benefit-in-kind percentage of 25%. What is the taxable benefit for the year?

  1. £2,500
  2. £4,000
  3. £5,000 Correct answer.
  4. £20,000

Explanation

The car benefit is the list price multiplied by the appropriate percentage. £20,000 × 25% = £5,000.

Question 48Income tax and NIC on individuals (UK)

Which of the following is a deductible expense for a self-employed sole trader?

  1. A fine for late filing of accounts
  2. Professional indemnity insurance for the trade Correct answer.
  3. Drawings taken by the owner
  4. Cost of entertaining UK customers

Explanation

Professional indemnity insurance is incurred wholly and exclusively for the trade and is deductible. Business entertainment, fines, and drawings are not allowable.

Question 49Income tax and NIC on individuals (UK)

A sole trader has taxable trading profit of £45,000. What is the income tax liability before any other reliefs, assuming only the personal allowance applies?

  1. £6,486 Correct answer.
  2. £9,000
  3. £5,486
  4. £7,486

Explanation

Taxable income is £45,000 − £12,570 = £32,430, all within the basic rate band. £32,430 × 20% = £6,486.

Question 50Income tax and NIC on individuals (UK)

What is the annual exempt amount for capital gains tax for an individual in 2024/25?

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

Explanation

The annual exempt amount for CGT was reduced to £3,000 from 2023/24 and remains at that level for 2024/25.