I85PREP
⌘ K
CTA study materials
CTA study resources

CTA practice questions

One question at a time. Build your CTA understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Taxation of Individuals (income tax, employment and personal reliefs)

For the tax year 2024/25, what amount of personal allowance is available to a UK resident individual who has adjusted net income of £30,000?

  1. £11,850
  2. £10,000
  3. £12,500
  4. £12,570 Correct answer.

Explanation

The standard personal allowance for 2024/25 is £12,570. It is reduced only where adjusted net income exceeds £100,000, so at £30,000 the full allowance is available.

Question 2Taxation of Individuals (income tax, employment and personal reliefs)

In 2024/25 an individual has adjusted net income of £110,000. What personal allowance is available to them?

  1. £7,570 Correct answer.
  2. £5,000
  3. £12,570
  4. £10,000

Explanation

The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000. The excess is £10,000, giving a reduction of £5,000, so the allowance is £12,570 less £5,000 = £7,570.

Question 3Taxation of Individuals (income tax, employment and personal reliefs)

What personal savings allowance is available in 2024/25 to an individual who is liable to income tax only at the basic rate?

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

Explanation

A basic rate taxpayer receives a personal savings allowance of £1,000 of savings income taxed at the savings nil rate. The £5,000 figure is the separate starting rate for savings, not the personal savings allowance.

Question 4Taxation of Individuals (income tax, employment and personal reliefs)

In 2024/25 an individual has taxable income of £130,000, all of which is employment income. What personal savings allowance is available to them?

  1. £500
  2. £5,000
  3. £0 Correct answer.
  4. £1,000

Explanation

Income of £130,000 falls wholly within the additional rate band, and additional rate taxpayers are entitled to no personal savings allowance. The £500 and £1,000 allowances apply only to higher and basic rate taxpayers respectively.

Question 5Taxation of Individuals (income tax, employment and personal reliefs)

In 2024/25 an individual has employment income of £15,000 and building society interest of £4,000, with no other income. What income tax is payable on the interest?

  1. £86 Correct answer.
  2. £0
  3. £800
  4. £286

Explanation

Non-savings taxable income of £2,430 (£15,000 less £12,570) uses up that part of the £5,000 starting rate band, leaving £2,570 of savings income taxed at 0%. The £1,000 personal savings allowance then covers a further £1,000, leaving £430 taxed at 20%, or £86.

Question 6Taxation of Individuals (income tax, employment and personal reliefs)

What is the amount of the dividend allowance for the tax year 2024/25?

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

Explanation

The dividend allowance was reduced to £500 from 6 April 2023 and remains at that level for 2024/25. Dividends within the allowance are taxed at a nil rate but still count towards the individual's total income.

Question 7Taxation of Individuals (income tax, employment and personal reliefs)

Which rate of income tax applies in 2024/25 to dividend income that falls within the higher rate band?

  1. 20%
  2. 8.75%
  3. 33.75%
  4. 39.35% Correct answer.

Explanation

Dividends are taxed at 8.75% within the basic rate band, 33.75% within the higher rate band and 39.35% within the additional rate band. The 20% and 40% rates apply to non-savings income, not dividends.

Question 8Taxation of Individuals (income tax, employment and personal reliefs)

Which statement about the marriage allowance for 2024/25 is correct?

  1. It permits a transfer of £1,260 of the personal allowance to a spouse or civil partner. Correct answer.
  2. It is worth £2,520 a year to the receiving spouse or civil partner.
  3. It is available to any couple living together as husband and wife or as civil partners.
  4. It is available where the recipient is liable to tax at the higher rate.

Explanation

The marriage allowance lets a basic rate taxpayer transfer 10% of their personal allowance, £1,260, to a spouse or civil partner. The recipient must not be liable at the higher or additional rate, and the couple must be married or in a civil partnership.

Question 9Taxation of Individuals (income tax, employment and personal reliefs)

What is the amount of the blind person's allowance for the tax year 2024/25?

  1. £2,870
  2. £3,070 Correct answer.
  3. £2,500
  4. £1,260

Explanation

The blind person's allowance for 2024/25 is £3,070. It is an additional allowance given on top of the personal allowance and is transferable between spouses and civil partners where unused.

Question 10Taxation of Individuals (income tax, employment and personal reliefs)

What is the maximum annual trading allowance that an individual may deduct from trading income in 2024/25?

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

Explanation

The trading allowance is £1,000 of gross trading income per tax year. It can be claimed in place of actual allowable expenses but is not available as a partial relief where expenses exceed the allowance.

Question 11Taxation of Individuals (income tax, employment and personal reliefs)

An individual receives property income of £1,400 in 2024/25 and has allowable property expenses of £900. Claiming the property allowance, what is the taxable property income?

  1. £900
  2. £500
  3. £1,400
  4. £400 Correct answer.

Explanation

The property allowance of £1,000 is deducted from gross receipts, giving £400 taxable, and partial relief is not permitted. Since £400 is lower than the £500 that would arise using actual expenses, the allowance claim is beneficial.

Question 12Taxation of Individuals (income tax, employment and personal reliefs)

An individual lets a furnished room in her only home and receives rent of £9,000 in 2024/25, incurring allowable expenses of £3,000. Claiming the most beneficial relief, what is her taxable rental profit?

  1. £0
  2. £6,000
  3. £1,500 Correct answer.
  4. £9,000

Explanation

Under rent-a-room relief the first £7,500 of gross receipts is exempt, so the taxable profit is £1,500. That is lower than the £6,000 that would result from deducting actual expenses, so the relief should be claimed.

Question 13Taxation of Individuals (income tax, employment and personal reliefs)

Under the approved mileage allowance payments scheme, what rate may an employer pay free of tax for the first 10,000 business miles an employee travels in their own car?

  1. 40p per mile
  2. 55p per mile
  3. 25p per mile
  4. 45p per mile Correct answer.

Explanation

The statutory approved rate is 45p per mile for the first 10,000 business miles in a car or van, falling to 25p thereafter. Payments above the approved amount are taxable earnings, and shortfalls attract mileage allowance relief.

Question 14Taxation of Individuals (income tax, employment and personal reliefs)

How is the taxable benefit of a company car made available to an employee for private use calculated?

  1. Cost of the car less any contribution by the employee.
  2. Market value multiplied by a fixed 20% rate.
  3. List price multiplied by a CO2 emissions-based percentage. Correct answer.
  4. List price less capital allowances claimed by the employer.

Explanation

The car benefit is the list price (including accessories) multiplied by an appropriate percentage that rises with the car's CO2 emissions. Where the car is unavailable for part of the year the benefit is time-apportioned, and capital contributions are capped at £5,000.

Question 15Taxation of Individuals (income tax, employment and personal reliefs)

An employer lends an employee £12,000 interest free for the whole of 2024/25. Which statement is correct?

  1. A taxable benefit arises because the loan exceeds £10,000. Correct answer.
  2. The whole £12,000 is taxable as earnings.
  3. A benefit arises only once the loan exceeds £20,000.
  4. No benefit arises because interest-free loans are exempt.

Explanation

A beneficial loan gives rise to a taxable benefit where the aggregate of loans outstanding exceeds £10,000. The benefit is the interest at the official rate less interest actually paid, not the loan itself.

Question 16Taxation of Individuals (income tax, employment and personal reliefs)

An employee receives an ex gratia termination payment of £45,000 in 2024/25, none of which relates to notice pay or restricted securities. How much of the payment is taxable?

  1. £0
  2. £15,000 Correct answer.
  3. £45,000
  4. £30,000

Explanation

The first £30,000 of a qualifying termination payment is exempt from income tax and NICs. Only the excess of £15,000 therefore falls into charge as employment income.

Question 17Taxation of Individuals (income tax, employment and personal reliefs)

What is the standard annual allowance for pension contributions in 2024/25?

  1. £50,000
  2. £60,000 Correct answer.
  3. £20,000
  4. £40,000

Explanation

The annual allowance was increased to £60,000 from 6 April 2023 and remains at that level for 2024/25. It can be extended by unused allowance from the previous three years, and is reduced for very high earners.

Question 18Taxation of Individuals (income tax, employment and personal reliefs)

An individual makes a Gift Aid donation of £800 to a charity in 2024/25. What gross amount is treated as paid for the purposes of extending the basic rate band?

  1. £800
  2. £1,200
  3. £1,000 Correct answer.
  4. £160

Explanation

Gift Aid donations are made net of basic rate tax, so the grossed-up amount is £800 × 100/80 = £1,000. That gross amount extends the individual's basic rate band and the higher rate threshold.

Question 19Taxation of Individuals (income tax, employment and personal reliefs)

How does a higher rate taxpayer obtain income tax relief on a Gift Aid donation made in 2024/25?

  1. The donor deducts tax at 40% before paying the charity.
  2. The charity reclaims 40% from HMRC on the donor's behalf.
  3. The donation extends the basic rate band, giving 20% relief. Correct answer.
  4. The donor claims a 20% tax credit through self assessment.

Explanation

Gift Aid relief is given by extending the basic rate band, and correspondingly the higher rate threshold, by the gross donation. The effect is that tax is saved at the 20% differential on income that would otherwise have borne 40% or 45%.

Question 20Taxation of Individuals (income tax, employment and personal reliefs)

An individual has taxable employment income of £60,000 in 2024/25 and pays £4,000 net into a personal pension under relief at source. What is the effect of the contribution on the basic rate band?

  1. It is reduced by the £4,000 actually paid.
  2. It is increased by the £4,000 actually paid.
  3. It is increased by £5,000, the grossed-up amount. Correct answer.
  4. It is unchanged because the provider reclaims tax at source.

Explanation

Under relief at source the pension provider reclaims basic rate tax, and the individual's basic rate band is extended by the gross contribution. Grossing up £4,000 at 100/80 gives £5,000, so £5,000 of income is moved out of the higher rate band.

Question 21Taxation of Individuals (income tax, employment and personal reliefs)

An individual with one child receives child benefit and has adjusted net income of £65,000 in 2024/25. How does the high income child benefit charge apply?

  1. 25% of the child benefit is charged to tax. Correct answer.
  2. 50% of the child benefit is charged to tax.
  3. No charge arises while income is below £80,000.
  4. The whole child benefit is charged to tax.

Explanation

The charge is 1% of the child benefit for each £200 by which adjusted net income exceeds £60,000. At £65,000 the excess is £25,000, which is 125 increments of £200, so 25% of the benefit is charged.

Question 22Taxation of Individuals (income tax, employment and personal reliefs)

An individual's income tax and Class 4 national insurance liability for 2023/24, after deducting tax deducted at source, is £2,400. What payments on account are required for 2024/25?

  1. Two payments of £1,200 each. Correct answer.
  2. Two payments of £2,400 each.
  3. One payment of £2,400 on 31 January 2025.
  4. No payments on account because the liability is under £5,000.

Explanation

Payments on account are required where the relevant liability exceeds £1,000 and less than 80% has been collected at source. Each of the two instalments is 50% of the prior year's liability, so £1,200 is due on 31 January 2025 and 31 July 2025.

Question 23Taxation of Individuals (income tax, employment and personal reliefs)

For 2024/25, what rate of primary Class 1 national insurance is payable by an employee on earnings between the primary threshold and the upper earnings limit?

  1. 12%
  2. 2%
  3. 6%
  4. 8% Correct answer.

Explanation

The employee's main primary Class 1 rate was reduced to 8% from 6 January 2024 and applies for the whole of 2024/25. The 2% rate applies only to earnings above the upper earnings limit.

Question 24Taxation of Individuals (income tax, employment and personal reliefs)

A self-employed individual has taxable trading profits of £60,000 in 2024/25. What is her Class 4 national insurance liability?

  1. £2,262
  2. £3,600
  3. £2,820
  4. £2,457 Correct answer.

Explanation

Class 4 is charged at 6% on profits between £12,570 and £50,270, giving £2,262, plus 2% on profits above £50,270, giving £195. The total liability is therefore £2,457.

Question 25Taxation of Individuals (income tax, employment and personal reliefs)

At what level of adjusted net income is the personal allowance for 2024/25 reduced to nil?

  1. £100,000
  2. £137,570
  3. £125,140 Correct answer.
  4. £150,000

Explanation

The allowance is reduced by £1 for every £2 above £100,000, so £12,570 of allowance is exhausted once income exceeds the threshold by twice that amount, that is £25,140. The allowance therefore falls to nil at £125,140.

Question 26Taxation of Individuals (income tax, employment and personal reliefs)

What is the standard personal allowance for an individual whose adjusted net income does not exceed £100,000 in the tax year 2024/25?

  1. £12,750
  2. £13,000
  3. £11,500
  4. £12,570 Correct answer.

Explanation

The personal allowance has been frozen at £12,570 since 2021/22 and remains at that level for 2024/25. It is progressively withdrawn once adjusted net income exceeds £100,000.

Question 27Taxation of Individuals (income tax, employment and personal reliefs)

In 2024/25, at what rate is non-savings, non-dividend income taxed to the extent that it falls within the basic rate band?

  1. 20% Correct answer.
  2. 21%
  3. 25%
  4. 0%

Explanation

Non-savings income within the basic rate band, which covers the first £37,700 of taxable income in 2024/25, is charged at 20%. Higher rates apply only to income above that band.

Question 28Taxation of Individuals (income tax, employment and personal reliefs)

What personal savings allowance is available in 2024/25 to an individual liable at the higher rate of income tax?

  1. £500 Correct answer.
  2. £1,000
  3. £150
  4. £nil

Explanation

The personal savings allowance is £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and nil for additional rate taxpayers. It applies to savings income such as bank interest.

Question 29Taxation of Individuals (income tax, employment and personal reliefs)

What is the maximum amount an adult may subscribe to an Individual Savings Account (ISA) in the tax year 2024/25?

  1. £40,000
  2. £20,000 Correct answer.
  3. £10,000
  4. £15,000

Explanation

The adult ISA subscription limit is £20,000 for 2024/25 and can be split across cash, stocks and shares, innovative finance and lifetime ISAs. Income and gains within an ISA are free of UK tax.

Question 30Taxation of Individuals (income tax, employment and personal reliefs)

By what date must an individual normally submit a paper Self Assessment tax return for the 2023/24 tax year?

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

Explanation

Paper returns must reach HMRC by 31 October following the end of the tax year, whereas online returns are due by 31 January. The same 31 January date is the deadline for paying the balancing liability.

Question 31Taxation of Individuals (income tax, employment and personal reliefs)

An employer provides an employee with a smartphone used for both business and private calls. How is the private use treated in 2024/25?

  1. It is a taxable benefit measured at 20% of the phone's cost.
  2. It is exempt if no more than one phone is provided. Correct answer.
  3. It is exempt only where private use is below 50%.
  4. It is taxed as earnings equal to the phone's value.

Explanation

One mobile phone or smartphone provided to an employee is exempt from tax on both business and private use. A second phone provided to the same employee does not benefit from the exemption.

Question 32Taxation of Individuals (income tax, employment and personal reliefs)

What is the official rate of interest used to compute the benefit of an interest-free or cheap loan in 2024/25?

  1. 1.75%
  2. 2.25% Correct answer.
  3. 2.00%
  4. 3.25%

Explanation

The taxable benefit on a loan provided by reason of employment is the difference between the interest at the official rate and the interest actually paid. For 2024/25 the official rate is 2.25%.

Question 33Taxation of Individuals (income tax, employment and personal reliefs)

An employee pays an annual subscription to a professional body on HMRC's approved list, and membership is relevant to her employment. How is the subscription treated for income tax?

  1. Deductible only if the employer reimburses it
  2. Deductible in full from employment income Correct answer.
  3. Deductible at 50% of the amount paid
  4. A taxable benefit equal to the subscription

Explanation

Subscriptions to professional bodies on the approved list are deductible where membership is relevant to the duties of the employment. The relief is given as a deduction from earnings, whether or not the employer pays.

Question 34Taxation of Individuals (income tax, employment and personal reliefs)

What is the maximum amount of savings income that can be taxed at the starting rate for savings in 2024/25?

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

Explanation

The starting rate for savings is 0% and applies to the first £5,000 of savings income. The band is reduced by any taxable non-savings income above the personal allowance.

Question 35Taxation of Individuals (income tax, employment and personal reliefs)

What rate of income tax applies to dividend income falling within the additional rate band in 2024/25?

  1. 39.35% Correct answer.
  2. 38.1%
  3. 45%
  4. 42.5%

Explanation

Dividends are taxed at 8.75% in the basic rate band, 33.75% in the higher rate band and 39.35% in the additional rate band for 2024/25. The dividend allowance of £500 is taxed at 0% first.

Question 36Taxation of Individuals (income tax, employment and personal reliefs)

For 2024/25, what weekly rate of Class 2 national insurance is payable by a self-employed individual with profits above the small profits threshold?

  1. £2.95
  2. £3.15
  3. £4.00
  4. £3.45 Correct answer.

Explanation

Class 2 contributions are payable at a flat weekly rate of £3.45 for 2024/25 where profits exceed the small profits threshold. Profits below that threshold do not give rise to a Class 2 liability.

Question 37Taxation of Individuals (income tax, employment and personal reliefs)

An employee's company car has an appropriate percentage of 25% and the employer provides free fuel for unlimited private motoring. What is the taxable fuel benefit for 2024/25?

  1. £2,780
  2. £27,800
  3. £6,950 Correct answer.
  4. £8,340

Explanation

The car fuel benefit is the fixed multiplier of £27,800 for 2024/25 multiplied by the car's appropriate percentage. Here £27,800 × 25% gives a taxable benefit of £6,950.

Question 38Taxation of Individuals (income tax, employment and personal reliefs)

From 2024/25, what turnover limit applies to a sole trader who wishes to prepare accounts on the cash basis?

  1. £300,000
  2. £150,000
  3. £1,000,000
  4. There is no turnover limit Correct answer.

Explanation

From 2024/25 the cash basis became the default method of accounting for unincorporated businesses. The turnover thresholds that previously restricted entry to and exit from the cash basis were removed.

Question 39Taxation of Individuals (income tax, employment and personal reliefs)

For 2024/25, at what level of adjusted income does the tapered annual allowance begin to reduce the standard £60,000 pension annual allowance?

  1. £312,000
  2. £240,000
  3. £300,000
  4. £260,000 Correct answer.

Explanation

The annual allowance is reduced by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000. The taper only bites where threshold income also exceeds £200,000.

Question 40Taxation of Individuals (income tax, employment and personal reliefs)

An employer pays 5p per mile to an employee who carries a fellow employee as a passenger on a business journey. How is the payment treated?

  1. It is exempt from income tax and NICs. Correct answer.
  2. It is exempt up to 2p per mile only.
  3. It is taxable as earnings in full.
  4. It is exempt only if the passenger is a director.

Explanation

Employers may pay up to 5p per mile for each fellow employee carried as a passenger on a business journey free of income tax and NICs. Any amount above 5p per mile is taxable.

Question 41Taxation of Individuals (income tax, employment and personal reliefs)

What is the standard van benefit charge for 2024/25 where a van is available to an employee for private use?

  1. £4,200
  2. £2,580
  3. £3,960 Correct answer.
  4. £3,600

Explanation

The flat-rate van benefit charge is £3,960 for 2024/25. Vans that cannot emit CO2 carry a nil charge, and a separate fuel benefit charge applies if fuel is also provided for private use.

Question 42Taxation of Individuals (income tax, employment and personal reliefs)

What is the maximum annual exemption for trivial benefits provided to a director of a close company in 2024/25?

  1. £150
  2. £50
  3. £300 Correct answer.
  4. £600

Explanation

A trivial benefit must cost £50 or less and cannot be cash or a cash voucher. For directors and office holders of close companies the exemption is capped at £300 in total per tax year.

Question 43Taxation of Individuals (income tax, employment and personal reliefs)

For 2024/25, the married couple's allowance is calculated as 10% of a maximum amount. What is that maximum amount?

  1. £9,125
  2. £10,375
  3. £4,280
  4. £11,080 Correct answer.

Explanation

The maximum married couple's allowance amount for 2024/25 is £11,080, giving relief of £1,108. Relief is restricted where the claimant's income exceeds a set limit, with a minimum amount of £4,280.

Question 44Taxation of Individuals (income tax, employment and personal reliefs)

What is the maximum weekly amount an employer may pay a homeworking employee free of tax, without supporting evidence, in 2024/25?

  1. £4
  2. £10
  3. £6 Correct answer.
  4. £26

Explanation

HMRC accepts a flat rate of £6 per week, or £26 per month, as covering the additional household costs of working from home. It may be paid without evidence of actual costs, and larger amounts can be paid if justified.

Question 45Taxation of Individuals (income tax, employment and personal reliefs)

An employee pays £900 from her own funds for a training course that updates skills she needs for her current job, and her employer does not reimburse her. How is the £900 treated?

  1. It is deductible only against savings income.
  2. It is not deductible because the employer did not require the training.
  3. It is deductible only if it leads to a qualification.
  4. It is deductible from her employment income. Correct answer.

Explanation

Employees may deduct expenses incurred wholly, exclusively and necessarily in the performance of their duties. Training that maintains or updates existing skills qualifies, whereas training to acquire new skills for a different role does not.

Question 46Taxation of Individuals (income tax, employment and personal reliefs)

An individual has adjusted income of £300,000 and threshold income of £250,000 in 2024/25. What is her tapered annual allowance?

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

Explanation

The allowance is reduced by £1 for every £2 by which adjusted income exceeds £260,000, giving £60,000 − £20,000 = £40,000. The taper applies because threshold income of £250,000 exceeds the £200,000 condition.

Question 47Taxation of Individuals (income tax, employment and personal reliefs)

An individual has employment income of £30,000 and dividend income of £10,000 in 2024/25. What is the income tax payable on the dividends?

  1. £3,486.00
  2. £787.50
  3. £831.25 Correct answer.
  4. £875.00

Explanation

Taxable non-savings income is £17,430, so the dividends fall wholly within the basic rate band. The £500 dividend allowance is taxed at 0% and the remaining £9,500 at 8.75%, giving £831.25.

Question 48Taxation of Individuals (income tax, employment and personal reliefs)

An employee is provided with living accommodation with an annual value of £6,000. The property cost the employer £150,000 and the employee pays no rent. The official rate of interest is 2.25%. What is the taxable benefit for 2024/25?

  1. £7,687.50 Correct answer.
  2. £9,375.00
  3. £1,687.50
  4. £6,000.00

Explanation

The benefit is the annual value plus an additional charge where the accommodation cost more than £75,000. The additional charge is (£150,000 − £75,000) × 2.25% = £1,687.50, giving £6,000 + £1,687.50 = £7,687.50.

Question 49Taxation of Individuals (income tax, employment and personal reliefs)

In 2024/25, an individual has unused pension annual allowance. Which tax years' unused allowances may be carried forward to 2024/25?

  1. 2023/24 only
  2. 2019/20, 2020/21 and 2021/22
  3. 2020/21, 2021/22 and 2022/23
  4. 2021/22, 2022/23 and 2023/24 Correct answer.

Explanation

Unused annual allowance may be carried forward for up to three tax years, so for 2024/25 the available years are 2021/22, 2022/23 and 2023/24. Earlier years fall outside the three-year window.

Question 50Taxation of Individuals (income tax, employment and personal reliefs)

An individual has employment income of £15,000 and savings income of £4,000 in 2024/25. How much of the savings income is taxed at the starting rate for savings?

  1. £2,570 Correct answer.
  2. £5,000
  3. £4,000
  4. £1,430

Explanation

Taxable non-savings income is £2,430, which reduces the £5,000 starting rate band to £2,570. That amount of the savings income is taxed at 0%, with the remainder covered by the personal savings allowance and then taxed at 20%.