On 1 July 2021, Sameer made a cash gift of £2,500 to his sister.

On 1 May 2022, he made a cash gift of £2,000 to a friend.

On 1 June 2022, he made a cash gift of £50,000 to a trust.

Sameer has not made any other lifetime gifts.

In respect of Sameer's cash gift of £50,000 to the trust, what is the lifetime transfer of value for
inheritance tax purposes after taking account of all available exemptions?

£48,500

£44,000

£46,000

£46,500
========================================================================
On 31 March 2023, Angus sold a house, which he had bought on 31 March 2009.

Angus occupied the house as his main residence until 31 March 2014, when he left for
employment abroad.

Angus returned to the UK on 1 April 2016 and lived in the house until 31 March 2017, when he
bought a flat in a neighbouring town which became his main residence.

What is Angus' total number of qualifying months of occupation for private residence relief on
the sale of the house?

72 months

141 months

105 months

96 months
========================================================================
Abena has made the following gross contributions to her personal pension scheme over the
past three tax years:
 What is the maximum gross contribution which Abena can make to her personal pension
scheme for the tax year 2022-23 without giving rise to an annual allowance charge?

£63,000

£40,000

£65,000

£52,000
======================================================================
Triangle Ltd is registered for value added tax (VAT) and uses the annual accounting scheme.

For the year ended 31 December 2022, the net VAT payable by Triangle Ltd was £73,500.

For the year ended 31 December 2021, the net VAT payable by Triangle Ltd was £47,700.

Indicate, by clicking on the relevant boxes in the table below, the number and amount of the
monthly payments on account of VAT which Triangle Ltd must make in respect of the year
ended 31 December 2022 prior to submitting its VAT return for that year.

========================================================================
What is the amount of Lili Ltd's deductible pre-trading expenditure in respect of the year ended
31 December 2022?
========================================================================
Paloma has been trading for a number of years. Her tax adjusted trading profit for the year
ended 31 May 2022 was £53,150 and for the year ended 31 May 2023 was £50,350.

What is the amount of class 4 national insurance contributions (NIC) payable by Paloma for the
tax year 2022-23?

£3,866

£3,864

£3,881

£3,957
========================================================================
Identify, by clicking on the relevant boxes in the table below, whether the following statements
are true or false.
========================================================================
Which of the following statements concerning self-assessment tax returns for individuals is true?

Individuals with tax payable of less than £1,000 for a tax year are not required to file a tax return

Individuals are only required to file a tax return for a tax year if they receive a notice to deliver
from HM Revenue and Customs (HMRC)

All individuals who submit a tax return on time are able to have their tax payable calculated by
HM Revenue and Customs (HMRC)

The tax return for an individual covers income tax, class 1, class 2 and class 4 national
insurance contributions and capital gains tax liabilities
========================================================================
In certain circumstances an individual is automatically not resident in the UK.

Indicate, by clicking on the relevant boxes in the table below, whether the following two
individuals satisfy or do not satisfy the tests to be treated as automatically not resident in the UK
for the tax year 2022-23.

Eric, who has never previously been resident in the UK. In the tax year 2022-23, he was in the
UK for 40 days.

Fran, who was resident in the UK for the two tax years prior to the tax year 2022-23. In the tax
year 2022-23, she was in the UK for 18 days.
========================================================================
Max is employed by Star Ltd. On 6 April 2021, Star Ltd provided Max with a camera for his
personal use. The camera had a market value of £2,000 on 6 April 2021.

On 6 April 2022, Star Ltd gave the camera to Max for free. The camera had a market value of
£1,400 on 6 April 2022.

What is Max's taxable benefit in respect of the camera for the tax year 2022-23?
========================================================================
Cora made a cash gift of £300,000 to her niece on 30 April 2017.

She then made a cash gift of £500,000 to her nephew on 31 May 2018.

Both of these amounts are stated after deducting available exemptions.

Cora subsequently died on 31 October 2022.

What amount of inheritance tax was payable as a result of Cora's death in respect of the cash
gift of £500,000 to her nephew?

£190,000

£110,000

£114,000

£105,000
========================================================================

Rajesh is a sole trader. He correctly calculated his self-assessment payments on account for
the tax year 2022-23 and paid these on the due dates.

Rajesh paid the correct balancing payment of £1,200 for the tax year 2022-23 on 30 June 2024.
Indicate, by clicking on the relevant boxes in the table below, what penalty and interest Rajesh
may be charged as a result of his late balancing payment for the tax year 2022-23.

========================================================================

If Oblong Ltd makes a claim to relieve its trading loss of £102,800 for the year ended 31 March
2023 against total profits for the year ended 31 March 2022, how much of this loss will remain
unrelieved?

£6,500

£16,600

£9,400

£23,400
====================================================================
Putting an asset into joint names with a spouse (or a partner in a registered civil
partnership) prior to the asset's disposal can be sensible capital gains tax (CGT)
planning.
Which of the following CANNOT be achieved as a direct result of using this type
of tax planning?

==================================================================

Eva's income tax liability and class 4 national insurance contributions (NIC) for the tax
year 2022-23 are £4,840. Her income tax liability and class 4 NICs for the tax year
2021-22 were £6,360.

What is the lowest amount to which Eva could make a claim to reduce each of her
payments on account for the tax year 2022-23 without being charged interest?

==================================================================

Adana died on 17 March 2023, and inheritance tax (IHT) of £566,000 is payable in
respect of her chargeable estate. Under the terms of her will, Adana left her entire
estate to her children.

At the date of her death, Adana had the following debts and liabilities:

(1) An outstanding interest-only mortgage of £220,000.

(2) Income tax of £43,700 payable in respect of the tax year 2022-23.

(3)Legal fees of £4,600 incurred by Adana's sister which Adana had verbally promised
to pay.

Adana’s husband had died on 28 May 2006, and only 20% of his inheritance tax nil rate
band was used on his death. The nil rate band for the tax year 2006-07 was £285,000.

On 22 April 2010, Adana had made a chargeable lifetime transfer of shares valued at
£500,000 to a trust. Adana paid the lifetime IHT of £52,250 arising from this gift. If
Adana had not made this gift, her chargeable estate at the time of her death would have
been £650,000 higher than it otherwise was. This was because of the subsequent
increase in the value of the gifted shares.

QUESTION 1

What is the maximum nil rate band which will have been available when calculating the
IHT of £566,000 payable in respect of Adana's chargeable estate?
QUESTION 2

What is the total amount of deductions which would have been permitted in calculating
Adana's chargeable estate for IHT purposes?

QUESTION 3

QUESTION 4

How much of the IHT payable in respect of Adana's estate would have been saved if,
under the terms of her will, Adana had made specific gifts of £400,000 to a trust and
£200,000 to her grandchildren, instead of leaving her entire estate to her children?

£240,000

£160,000

£0

£80,000

QUESTION 5

How much IHT did Adana save by making the chargeable lifetime transfer of £500,000
to a trust on 22 April 2010, rather than retaining the gifted investments until her death?

£260,000

£207,750

£147,750
£200,000

==================================================================

QUESTION 1
What amount of indexation allowance will have been deducted in calculating the
chargeable gain of £120,700 on the disposal of Kat Ltd's factory?

£60,845

£23,400

£71,118

£84,245

QUESTION 2

If Kat Ltd decides to purchase the freehold warehouse and makes a claim to rollover the
chargeable gain on the factory under the rollover relief rules, what will be the base cost
of the warehouse for chargeable gains purposes?

£243,300

£272,000

£180,000

£151,300

QUESTION 3

If Kat Ltd decides to acquire the leasehold office building and makes a claim to hold
over the chargeable gain on the factory under the rollover relief rules, what is the latest
date by which the held-over gain will crystallise?

Ten years from 31 May 2022

The date when the office building is sold

40 years from 30 September 2023

Ten years from 30 September 2023

QUESTION 4
What cost figure will have been used in calculating the chargeable gain on Kitten's
disposal of 20,000 ordinary shares in Kat Ltd?

£12,000

£63,200

£84,800

£20,000

QUESTION 5 -

What is Kitten's capital gains tax (CGT) liability for the tax year 2022-23?

—------------------------------------------------------------------------------------------------------------------

For each of the eight months prior to the date on which she registered for VAT, Alisa
paid £240 per month (inclusive of VAT) for website design services and £180 per month
(exclusive of VAT) for advertising. Both of these supplies are standard rated for VAT
purposes and relate to Alisa's business activity after the date from when she registered
for VAT.
After registering for VAT, Alisa purchased a car on 1 January 2023. The car is used
60% for business mileage. During the quarter ended 31 March 2023, Alisa spent £456
on repairs to the car and £624 on fuel for both her business and private mileage. The
relevant quarterly scale charge is £292. All of these figures are inclusive of VAT.

All of Alisa’s customers are registered for VAT, so she appreciates that she has to issue
VAT invoices when services are supplied.

Q1 *

From what date would Alisa have been required to be compulsorily registered for VAT
and therefore have had to charge output VAT on her supplies of services?

Q2*

What amount of pre-registration input VAT would Alisa have been able to recover in
respect of inputs incurred prior to the date on which she registered for VAT?

£468

£608

£536

£456

Q3*

What is the maximum amount of input VAT which Alisa can reclaim in respect of her
motor expenses for the quarter ended 31 March 2023?

£108

£138

£180

£125

Q4*

Which of the following statements regarding the due date and payment method for
Alisa's VAT liability for the quarter ended 31 March is CORRECT?
Alisa must make an electronic payment to reach HMRC by 7 June

Alisa has the option of making either a cheque payment or an electronic payment to
reach HMRC by 7 June

Alisa has the option of making either a cheque payment or an electronic payment to
reach HMRC by 7 May

Alisa must make an electronic payment to reach HMRC by 7 May

Q5

==================================================================

This scenario relates to one requirement.

Joe is the managing director and 100% shareholder of OK-Joe Ltd. He has always
withdrawn the entire profits of the company as director’s remuneration, but given a
recent increase in profitability he wants to know whether this basis of extracting the
profits is beneficial.
For the year ended 5 April 2023, OK-Joe Ltd’s taxable total profits, before taking
account of director’s remuneration, are £65,578. After allowing for employer’s class 1
national insurance contributions (NIC) of £7,388, Joe’s gross director’s remuneration is
£58,190.

The figure for employer’s NIC of £7,388 does not deduct the £4,000 employment
allowance as, because Joe is OK-Joe Ltd's only employee, this is not available.

Calculate the overall saving of tax and NIC for the year ended 5 April 2023 if Joe had
instead paid himself gross director's remuneration of £8,000 and dividends of £46,170.

Notes:

1.You are expected to calculate the income tax payable by Joe, the class 1 NIC payable
by both Joe and OK-Joe Ltd, and the corporation tax liability of OK-Joe Ltd for the year
ended 5 April 2023.

2.You should assume that the rate of corporation tax remains unchanged.

==================================================================

This scenario relates to four requirements.

Ashura has been employed by Rift plc since 1 January 2020. She has also been self-
employed since 1 July 2022, preparing her first accounts for the nine-month period
ended 5 April 2023. The following information is available for the tax year 2022-23:

Employment

(1) During the tax year 2022-23, Ashura was paid a gross annual salary of £56,600.

(2) On 1 January 2022, Ashura personally paid two subscriptions. The first was a
professional subscription of £320 paid to a HM Revenue and Customs’ (HMRC’s)
approved professional body. The second was a subscription of £680 to a health club
which Ashura regularly uses to meet Rift plc’s clients. Ashura was not reimbursed for
the costs of either of these subscriptions by Rift plc.
(3) During the tax year 2022-23, Ashura used her private car for business purposes.
She drove 3,400 miles in the performance of her duties for Rift plc, for which the
company paid her an allowance of 55 pence per mile.
(4) During the tax year 2022-23, Ashura contributed £2,800 into Rift plc’s HMRC’s
registered occupational pension scheme and £3,400 (gross) into a personal pension
scheme. Self-
employment
(1) Ashura’s tax adjusted trading loss based on her draft accounts for the nine-month
period ended 5 April 2023 is £3,300. This figure is before making any adjustments
required for:

(i) Advertising expenditure of £800 incurred during January 2022. This expenditure
has not been deducted in calculating the loss of £3,300.
(ii) The cost of Ashura’s office (see note (2) below).
(iii) Capital allowances.

(2) Ashura runs her business using one of the five rooms in her private house as an
office. The total running costs of the house for the nine-month period ended 5 April 2023
were £4,350. No deduction has been made for the cost of the office in calculating the
loss of £3,300.

(3) On 10 June 2022, Ashura purchased a laptop computer for £2,600.

On 1 July 2022, Ashura purchased a car for £25,600. The car has a CO2 emission rate
of 117 grams per kilometre. During the nine-month period ended 5 April 2023, Ashura
drove a total of 8,000 miles, of which 2,500 were for self-employed business journeys.

Other information

Ashura’s total income for the previous four tax years is as follows:

(a) State TWO advantages for Ashura of choosing 5 April as her accounting date rather
than a date early in the tax year such as 30 April.
(b) Calculate Ashura's revised tax adjusted trading loss for the nine-month period ended
5 April 2023.

(c) Explain why it would not be beneficial for Ashura to claim loss relief under the
provisions giving relief to a loss incurred in the early years of trade.

Note: You should assume that the tax rates and allowances for the tax year 2022-23
also applied in all previous tax years.

(d) Assuming that Ashura claims loss relief against her total income for the tax year
2022-23, calculate her taxable income for this tax year.

==================================================================

This scenario relates to two requirements.

Mable is a serial entrepreneur, regularly starting and disposing of businesses. On 31

July 2022, Tenth Ltd, a company owned by Mable, ceased trading. On 1 October 2022

Eleventh Ltd, another company owned by Mable, commenced trading. The following
information is available:

Tenth Ltd

(1) For the final four-month period of trading ended 31 July 2022, Tenth Ltd had a tax
adjusted trading profit of £52,400. This figure is before taking account of capital
allowances.

(2) On 1 April 2022, the tax written down value of the company’s main pool was
£12,400. On 3 June 2022, Tenth Ltd purchased a laptop computer for £1,800.

On 31 July 2022, the company sold all of the items included in the main pool at the start
of the period for £28,200 and the laptop computer for £1,300. None of the items
included in the main pool was sold for more than its original cost.

(3) On 31 July 2022, Tenth Ltd sold the company’s freehold office building for
£180,300. The building was purchased on 3 May 2016 for £151,334 and its indexed
cost to December 2017 was £164,500.

(4) During the four-month period ended 31 July 2022, Tenth Ltd let out one floor of its
freehold office building which was always surplus to requirements. The floor was rented
at £1,200 per month, but the tenant left owing the rent for July 2022 which Tenth Ltd
was unable to recover. The total running costs of the office building for the four-month
period ended 31 July 2022 were £6,300, of which one-third related to the let floor. The
other two-thirds of the running costs have been deducted in calculating Tenth Ltd’s tax-
adjusted trading profit of £52,400.

(5) During the four-month period ended 31 July 2022, Tenth Ltd made qualifying
charitable donations of £800.

Eleventh Ltd

(1) Eleventh Ltd’s operating profit for the six-month period ended 31 March 2023 is
£122,900. Depreciation of £2,580 and amortisation of leasehold property of £2,000 (see
note (2) below) have been deducted in arriving at this figure.
(2) On 1 October 2022, Eleventh Ltd acquired a leasehold office building, paying a
premium of £60,000 for the grant of a 15-year lease. The office building was used for
business purposes by Eleventh Ltd throughout the six-month period ended 31 March
2023.

(3) On 1 October 2022, Eleventh Ltd purchased two cars. The first car cost £12,600,
and has a CO2 emission rate of 45 grams per kilometre. This car is used as a pool car
by the company’s employees. The second car cost £13,200, and has zero CO2
emissions. This car is used by Mable, and 45% of the mileage is for private journeys.

(4) On 1 October 2022, Mable made a loan of £100,000 to Eleventh Ltd at an annual
interest rate of 5%. This is a commercial rate of interest, and no loan repayments were
made during the period ended 31 March 2023. The loan was used to finance the
company’s trading activities.

(a) Calculate Tenth Ltd's taxable total profits for the four-month period ended 31 July
2022.

b) Calculate Eleventh Ltd's tax adjusted trading profit for the six-month period ended 31
March 2023.

==================================================================

ANSWERS

£50,000 minus balance of 2022-23 AE £1,000 (3,000 - 2,000 PET) minus the balance of the 2021-22
AE £500 (3,000 - 2,500) = £48,500.

==============================================================================
168 - (72 - 9) = 105 months.

Or:

Actual occupation 72 (60 + 12)

Employed abroad (any length with reoccupation) 24
Last 9 months ownership 9

72 + 24 + 9 = 105

================================================================================

£40,000 + £0 + £13,000 + £12,000 = £65,000

Use the current tax year allowance first and then starting working forwards from the earliest available tax
year.

================================================================================

Nine monthly payments of: 47,400 x 90%/9 = £4,770

================================================================================

Lili Ltd can deduct the research into competitors incurred on 6 June 2017 (12,000) and the donation to the
local school on 15 December 2021 (2,000) = £14,000.

It cannot deduct the initial market research as it was incurred more than 7 years before the
commencement of trade, nor the entertaining costs, as it is non-staff entertaining.

================================================================================

((50,270 - 12,570) x 10.25%) + ((53,150 - 50,270) x 3.25%) = £3,957

================================================================================

True statement: National Insurance is a direct tax suffered by employees, employers and the self-
employed on earnings.

Corporation tax is a tax on the profits of companies, not the turnover. Inheritance tax is a tax on the
transfer of assets not income. VAT is an indirect tax not a direct tax.

================================================================================

If a taxpayer submits a paper return on time, they can ask HMRC to calculate the tax due. Tax returns
submitted electronically automatically calculate the tax due.

================================================================================

Eric satisfies the tests: less than 46 days and not previously resident.

Fran does not satisfy the tests: resident during the previous three years, so to be automatically not
resident she must be in the UK for less than 16 days.
================================================================================

The market value when first made available less the taxable benefit in respect of the private use in 2020-
21; 2,000 - (2,000 x 20%) = £1,600

This is higher than the market value at the date of transfer, £1,400

================================================================================

190,000 ((500,000 – 25,000 (325,000 – 300,000)) at 40%) less 40% (4 – 5 years) = £114,000

================================================================================

Interest will be charged from 1 February 2024 to 30 June 2024:

1,200 x 3.25% x 5/12 = £16

A penalty will be imposed since more than 30 days late:

1,200 x 5% = £60

===============================================================================

102,800 - 10,100 - 79,400 - 6,800 = £6,500

================================================================================

The CGT due date will be the same whether the asset is split between spouses (or civil partners) or not.

================================================================================

4,840/2 = £2,420

================================================================================

ANS 1

325,000 + (325,000 x 80%) = £585,000

ANS 2

220,000 + 43,700 = £263,700

ANS 3

It will be the personal representatives of someone's estate who will be responsible for paying any IHT on
the death estate and this must be done by six months after the end of the month of death.

ANS 4

£0. Neither gift would have made any difference to the amount payable.

ANS 5
(650,000 at 40%) - 52,250 = £207,750

================================================================================

ANS 1
0.439 x £(138,600 + 23,400) = £71,118

ANS 2

272,000 – (120,700 – (364,000 – 272,000)) = £243,300

ANS 3

The gain will crystallise at the latest of the date the replacement is disposed of, the date the replacement
ceases to be used for trade purposes and ten years from the date of the replacement's acquisition. This
is, therefore, ten years from the date of the replacement's acquisition on 30 September 2023.

ANS 4

(90,000 + (90,000 x 2/3 x 6.40)) x 20,000/(90,000 + (90,000 x 2/3)) = £63,200

ANS 5

((28,900 - 12,300) at 20%) + (142,200 at 10%) = £17,540

================================================================================

ANS 1

January to April 2022: 4 x £7,500 = £30,000

May to August 2022: 4 x £10,000 = £40,000
September 2022: £15,500

Therefore, the registration threshold of £85,000 is met by 30 September 2022.

Alisa should have notified HMRC by 30 October 2022 with registration effective from 1 November 2022.

ANS 2

((240 x 20/120) + (180 x 20%)) x 6 = £456

ANS 3

(456 + 624) x 20/120 = £180

ANS 4

Alisa must make an electronic payment by 7 May.

The deadline is one calendar month and seven days after the end of the VAT period. Electronic payment
is required.

ANS 5

A customer's VAT registration number is not required to be included on a valid VAT invoice.

================================================================================
==============================================================================
===========================================================================