1 2 The correct answer is:

B £8,000
Of the £9,000 dividend £700 falls into the basic rate band, albeit covered by the dividend nil rate b a n d and a further
£300 which falls into the higher rate band is covered by the dividend nil rate band.
£9,000 - £700 - £300 = £8,000.

£ 6,806

£ £

Tax o n non-savings income 210 X 20% 42

Tax o n saving income:

- in savings starting rate band 4,790 x 0% 0

5,000

-savings income nil rate band 500 x 0% 0

- in savings basic rate band 32,200 x 20% 6,440

37,700

- in savings higher rate band 810 x 40% 324

38,510

Income tax liability 6,806

£ 3,563

Tax

£17,015 x 20% 3,403

£1,000 x 0% 0

£800 x 20% 160

Income tax liability 3,563

15
£ 63

Taxable income £15,815

20% o n £15,815 3,163

Less PAYE (3,100)

Income tax payable 63

(SAMPLE EXAM)
16
£T]
The personal allowance will b e zero for any additional rate taxpayer.

17 The correct answer is:

D £63,982

Non-savings income 1 33,000

Savings income 27,600

Dividends 1 5,000

Taxable income 1 75,600

£37,700 x 20% 7,540

£87,440 x 40% 34,976

£7,860 x 45% 3,537

£133,000

£27,600 x 45% 12,420

£1,000 x 0% 0

£14,000 x 39.35% 5,509

£175,600

Income tax liability 63,982

Dahlia has n o savings income nil rate band as she is an additional rate taxpayer. She does benefit from the dividend
nil rate band.

18
£ 3,570

Personal allowance 12,570

Less (£11 8,000 -£100,000) * Vs (9,000)

Restricted personal allowance 3,570

The personal allowance is abated due to the level of net income.

19
£ 2,638

Non-savings income £14,450 x 20% 2,890

Less tax reducer for marriage allowance £1,260 x 20% (252)

Geoff’s income tax liability 2,638

The election is possible because Geoff is a basic rate taxpayer and Jessica pays no income tax.
2 0 The correct answer is:
D N o election can be made to transfer any part of Richard's personal allowance to Leanne.
N o election can be made to transfer any part of Richard's personal allowance to Leanne as she is a higher rate
taxpayer.

21 The correct answer is:

B £17,330
Sarah's taxable income is her net income less her personal allowance;
ie, £29,900 - £ 1 2 , 5 7 0 = £17,330
The marriage allowance does not affect her personal allowance o r taxable income, but reduces her income tax
liability by 20% of Arthur's personal allowance transferred to her.

£ 8,540

Basic rate £37,700 * 20% 7,540

Higher rate (£40,200 - £37,700) = £2,500 « 40% 1,000

Less marriage allowance (0)

Income tax liabil ity 8, 540

In 2023/24 the marriage allowance is not available to Sheila and Alice because one of them has income which is taxed in
the higher rate band.

23 The correct answers are:

C Have no impact o n Maalik's income tax liability
Maalik is a basic rate taxpayer in 2023/24 so increasing the upper limit of his basic rate band will have no impact o n
the calculation of his income tax liability.

24
£0
With net income exceeding £125,140, the PA is reduced to zero.
4 Employment income

1 The correct answer is:

A 802L

Personal allowance 12,570

Less underpaid tax (£910 ><100/20} (4,550)

8,020

PAYE code 802L

PAYE code K 539

Personal allowance 12,570

Less taxable benefits (17,970}

Net allowances (5,400)

Remove the last digit (gives 540) and deduct 1 .

PAYE code K539

3 The correct answer is:

D K61

Personal allowance 12,570

Less taxable benefit (13,195)

Net allowances (625}

Remove the last digit (gives 62} and deduct 1.

694 L

Personal allowance 12,570

Less taxable benefit (5,630)

Net allowances 6,940

Remove the last digit and a d d L.

5 The correct answer is:
B 907L

Personal allowance 12,570

Less deduction (£1,400 x 1 00/40) (3,500)

Net allowances 9,070

Remove the last digit and a d d L.

{SAMPLE EXAM)
5 Trading profits

1 The correct answers are:

A Amy has just sold a house that she bought three months ago. She has spent £40,000 to make the property more
attractive to potential purchasers. Amy has not lived in this house.
D Dante has a n interest in vintage cars. He has just sold a car that h e has been renovating for the last six months. This is the
seventh renovated carthat he has sold in the last two years.
{SAMPLE EXAM)

2 The correct answers are:

B Provision of own equipment
E Correction of own work

3 The correct answer is:

D To be sold at a profit
The nature of the asset would suggest a trading motive.

4 The correct answer is:

C £300
When receipts are greater than £1,000 the taxpayer may use the normal rules for calculating their tax-adjusted profits
{£1,300 - £750 = £550). Alternatively they may elect to treat the trading allowance as one single allowable deduction
which makes Marina's taxable trading profit £300 (ie, £1,300 - £1,000).

5 The correct answers are:

A The number of transactions
C Changes to the asset
Interval of time between purchase a n d sale - a short length of ownership would indicate trade.
Correction of own work - this is not one of the badges of trade.

6 The correct answer is:

A £Nil
As Julie’s receipts are less than £1,000, the trading allowance applies and her advertising income is not taxed.
6 Capital allowances

1 The correct answer is:

B £2,070
£2,300 x 90% = £2.070
AIA applies b u t is apportioned due to Nina's private use.
The correct answer is:
F £373
18% x £2,300 x 90% = £373
N o AIA applies to cars. WDA is apportioned due to private use.

2 The correct answer is:

A £3,000
The maximum capital allowances that Aasia will receive in respect of the purchase of the photocopier in the period
ended 31 December 2023 are £3,000 as it is covered by the AIA (pro-rated to £1,000,000 x 10/12 = £833,333).
The correct answer is:
F £450
18% x 10/12 x £3.000= £450

3 The correct answer is:

A £5,000
The maximum capital allowances available o n the computer i n the period to 3 0 April 2023 are £5,000 as it is covered
b y the AIA (pro-rated to £1,000,000 * 4/12 = £333,333).
The correct answer is:
F £792
£13,200 x 18% x 4/12 = £792

4 The correct answer is:

C £10,560
£13,200 (covered by AIA) * 8 0 % = £10,560

5 The correct answer is:

B Incorrect
The expenditure qualifies for a first year allowance (FYA) of 100%.
The correct answer is:
D Incorrect
It will often result in capital allowances but not always (eg, cost of shares)
 £ 1,019,020

FYA Mein pool Allowances

Y/e 31.12.23 £ £ £

Acquisitions (FYA):

1.9.23 Low-emission car 16,500

FYA @ 100% (16,500) 16,500

Acquisitions (AIA):

1.7.23 Machinery 1,014,000

AIA (1,000,000) 1,000,000

14,000

W D A @ 18% (2,520) 2,520

TWDVc/f 11,480

Allowances 1,019,020

7 The correct answer is:

C £3,600
The balancing allowance for full business use is £4,800 (£1 5,000 - £10,200).
This is restricted to the business proportion £3,600 (75% * £4,800).

Q
Capital allowances £ 20,000

FYA Main pool Allowances

Y/e 31.12.23 £ £ £
Acquisitions (FYA):

20.3.23 Low-emission car 8,000

FYA @ 100% (8,000) 8,000

Acquisitions (AIA):

12.2.23 Computer 10,000

1.5.23 Office furniture 2,000

AIA (12,000) 12,000

TWDVc/f 0

Allowances 20,000
 9 J----------
Capital allowances £ 1,458

Car < 50 g/km Allowances

1.9.22-31.5.23 £ £

Addition 18,000

WDA 1 8% x 9/12 (2,430) x 60% 1,458

15,570

(SAMPLE EXAM)

10 The correct answer is:

C Balancing allowance of £1,750

y/e 31.3.24 Private use car Allowances

£ £

TWDV brought forward 17,000

Disposal (14,500)

Balancing allowance 2,500 X 70% 1,750

£ 3,240

The car has a writing d o w n allowance of 18% per annum as it will g o in the main pool. This is not restricted for private use
by an employee: 1 8% * £1 8,000 = £3,240.

1 2 The correct answer is:

B £1,440

1 .1 0.23 - 3 1.3.24 (six months) Main pool Allowances

£ £

Addition 16,000

WDA @ 18% x 6/12 (1,440) 1,440

TWDV c/f 14,560

13 The correct answer is:
A £8,560

Main pool Allowances

1.4.23-31.12.23 ( 9 months) £ £

TWDV b/f 560

Acquisitions (AIA):

Computer 8,000

Al A (£1,000, 000 x 9/12 = £750,000) (8,000) 8,000

560

Write-off of small pool (£1,000 * 9/12 = £750) (560) 560

TWDV c/f 0

Allowances 8,560

As the small pool is less than the pro-rated minimum balance of £750, it may b e written off in full.

14
£ 342

As the business continues there is n o balancing adjustment in the main pool o n the disposal of the machine. (Once the
pool drops to £1,000 or less in a later year, the whole pool may be written off.)

Y/e 31.12.23 Main pool Allowances

£ £

TWDV b/f 2,300

Disposal (400)

1,900

W D A @ 18% (342) 342

TWDV c/f 1,558

15
£ 3,870

Y/e 30.9.23 Main pool Allowances

£ £

TWDV b/f 25,400

Disposal (use cost as sale proceeds exceed cost) (3,900)

21,500

W D A @ 18% (3,870) 3,870

TWDV c/f 17,630

1 6 The correct answer is:
C £11,160

1 . 1 0 . 2 3 - 3 1 . 3 . 2 4 ( 6 months) FYA Main pool Allowances

£ £ £

TWDV b/f 24,000

WDA@ 18% x 6/12 (2,160) 2,160

Additions (FYA) 9,000

FYA @ 1 00% (lowe mission car) (9,000) 9,000

TWDV c/f 0 21,840

Total allowances 11,160

The FYA is not pro-rated for short accounting periods.

Note: Unless you are told otherwise, assume n o private use of assets by the o w n e r s ) of a business.

17 The correct answer is:

C £425,167

Main pool Allowances

1 . 2 . 2 3 - 3 0 . 6 . 2 3 (5 months) £ £

Acquisitions (AIA):

23.5.23 Machine 530,000

AIA (£1,000,000 x 5/12) (416,667) 416,667

113,333

WDA@ 18% x 5/12 (8,500) 8,500

TWDV c/f 104,833

Allowances 425,167

1 8 The correct answer is:

B Car with emissions of 45 g / k m costing £1 4,000 o n 1 0 June 2023 with 20% private use by one of the employees

19
£ 4,626

Y/e 31.1.24 Main pool Allowances

£ £

TWDV b/f 31,000

Disposal (5,300)

25,700

W D A @ 18% (4,626) 4,626

TWDV c/f 21,074
 £ 1,003,600

Main pool Allowances

Y/e 31.12.23 £ £

Acquisitions (AIA):

1.5.23 Machine 1,020,000

AIA (1,000,000) 1,000,000

20,000

W D A @ 18% (3,600) 3,600

TWDVc/f 16,400

Allowances 1,003,600

21
£ 3,236

Murray's van (£17,000 x 1 8 % * 60%) 1,836

Nuri's van - balancing allowance (£8,000 - £6,000) * 70% 1,400

3,236
7 Trading profits - basis of assessment

£ 39,300

y/e 3 1 March 2024 Total Rafael Samira Tadeo

£ £ £ £

Salary 10,000 10,000

Interest 6,100 3,000 1,200 1,900

Balance 1:1 :1 108,900 36,300 36,300 36,300

125,000 39,300 47,500 38,200

Rafael has taxable trading profits of £39,300 for the year ended 31 March 2024. Under the tax year basis this will be
assessable on Rafael in 2023/24.

2 The correct answer is:

A £34,333
Taxyear 2024/25: 6 April 2024-5 April 2025 = (1/12 38,000) + (11/12 x 34,000)
The correct answer is:
E £25,833

Final tax year 2 0 2 5 / 2 6 £

6 April 2025 to 30 November 2025

1/12 x y/ G 30 April 2025 2,833

p/e 30 November 2025 23,000

25,833

3 The correct answer is:

B Jabir £32,958; Kadin £28,292

y/e 3 1 August 2024 Total Jabir Kadin

£ £ £

Salary 8,000 8,000

PSR 1:1 97,000 48,500 48,500

105,000 56,500 48,500

2023/24 comme nceme nt of trade (7/12) 32,958 28,292

First tax year (2023/24)

Assessable period 1 September 2023 to 5 April 2024
 £57,834

y/e 3 0 September 2 0 2 4 Total Vai Cleo Frank

£ £ £ £

Interest o n capital (5%) 6,000 2,500 1,500 2,000

PSR 1:1:1 144,000 48,000 48,000 48,000

1 50,000 50,500 49,500 50,000

y/e 3 0 September 2025 Total Vai Cleo Frank

£ £ £ £

Interest o n capital (5%) 6,000 2,500 1,500 2,000

PSR 1:1:1 1 94,000 64,667 64,667 64,667

200,000 67,167 66,167 66,667

Assessable profits in 2024/25 = 6 Apr 2024 to 5 A p r 2025

(6/1 2 x 49, 500) + (6/1 2 x 66, 1 67 ) = £57,834

5 The correct answer is:

B Tom £91 ,667; Dick £40,834

Y/e 31 October 2024 Total Tom Dick

£ £ £

Salary 10,000 10,000

PSR 2:1 110,000 73,333 36,667

120,000 83,333 36,667

Y/e 31 October 2025 Total Tom Dick

£ £ £

Salary 10,000 10,000

PSR 2:1 140,000 93,333 46,667

1 50,000 103,333 46,667

Assessable period for 2024/25: 6 April 2024 to 5 April 2025

7/12 x profits for y/e 31 October 2024 + 5/12 x profits for y/e 31 October 2025
Tom: (7/12 x 83,333) + (5/12 x 103,333) = £91,667
Dick: (7/1 2 x 36,667) + (5/1 2 x 46,667) = £40,834

£ 12,273

Final tax year (2024/25)

6 April 2024 to 31 December 2024

9/11 x p/e 31 December 2024 12,273

 7 The correct answer is:
C £2,200
First tax year (2022/23)
Assessable period 1 January 2023 to 5 April 2023
3/12 x £6,000 = £1,500
Second tax year (2023/24)
Assessable period 6 April 2023 to 5 April 2024
{9/1 2 x £6,000) + (3/1 4 x £2,800) = £5, 100
Final tax year {2024/25)
Assessable period 6 April 2024 to 2 8 February 2025
11/14 x £2,800 = £2,200

8 The correct answer is:

D £3,571
Final tax year (2024/25)

Basis of assessment 6 April 2024 to 30 April 2024

1 / 7 x p/ e 30 April 2024 3,571

9 The correct answer is:

B £18,000
First tax year (2023/24)
Assessable period 1 July 2023 to 5 April 2024 = 9/12 x £24,000 = £1 8,000

10 The correct answer is:

A £28,000 is taxable in 2023/24, representing the period 6 April 2023 to 5 April 2024.
12/18 x £42,000 .

£ 85,000

First tax year (2023/24)

1 July 2023 to 5 April 2024 = £60,000 + (3/1 2 x £100,000)

£ 50,750

Total Audrey Elaine

£ £ £

Y/e 31 March 2024

Interest o n capital (5%) 3,500 2,500 1,000

PSR1:1 96,500 48,250 48j50

100,000 50,750 49,250

13 The correct answer is:
D £30,000

Total David Doreen

£ £ £

Y / e 3 0 J u n e 2024

PSR2:1 120,000 80,000 40,000

First year (2023/24)

1 July 2023 to 5 April 2024
9/12 x £40,000 = £30,000

14
£13,073

2024/25 = 6 April 2024 to 3 0 September 2024 = 6/8 * £1 7,430 = £1 3,073

1 5 The correct answer is:

B £39,990

Total Leroy Annabelle

£ £ £

Interest o n capital (5%) 2,900 1,750 1,150

Balance (2:3) 95,600 38,240 57,360

Tax adjusted profit 98,500 39,990 58,510

{SAMPLE EXAM)

1 6 The correct answer is:

C £44,451
2023/24: 6 April 2023 to 5 April 2024
{11/14 x £53,208) + (1/1 2 x £31,740) = £44,451
{SAMPLE EXAM)
17 The correct answers are:
B Taxable trad! n g profits for 2023/24 are £5,000.
D Taxable trading profits for 2024/25 are £23,750.

First tax year (2023/24}

Assessable period 1 January 2024 to 5 April 2024

3/6 x £10,000 £5,000

Second tax year (2024/25)

Assessable period 6 April 2024 to 5 April 2025

3/6 x 6 m/e 30 June 2024 5,000

9/12 x y/ e 3 0 June 2025 18,750

23,750

1 8 The correct answer is:

D Amber £1 45,000; Betty £95,000

Total Amber Betty

£ £ £

6 months to 3 0 September

PSR (£120,000) 2:1 1 20,000 80,000 40,000

6 months to 31 March
Salary (x 6/12} 10,000 10,000

PSR (£110,000) 1:1 110,000 55,000 55,000

240,000 145,000 95,000

8 N a t i o n a l insurance contributions

1 The correct answers are:

C Class 2
D Class 4
Sho's trading profits are above the lower profits limit and so he must pay Classes 2 and 4 NIC. His salary is below the
primary and secondary NIC thresholds throughout 2023/24 and so n o Class 1 NICs are due.

2 The correct answer is:

B Incorrect
Companies d o not pay Class 4 NIC.
The correct answer is:
C Correct
He is below state pension age and his earnings are above the primary threshold.
The correct answer is:
F Incorrect
Dividends are not earnings. The company will therefore be liable to secondary Class 1 NICs o n £20,000 + £15,000 =
£35,000.

£ 84

(£1 3,500 - £1 2,570) * 9% = £84

4 The correct answer is:

B £848

Class 2 : 52 * £3.45 179

Class 4: 9% x (£20,000 - £12,570) 669

848

{SAMPLE EXAM)

£ 4,204

Class 1 secondary (£39,067 + £500 - £9,1 00) x 1 3.8% 4,204

Class 1 secondary contributions are not paid o n the car benefit but are paid on the vouchers. The car benefit gives rise to
a liability to Class 1 A NIC.
 £ 690

Class 1 A £5,000 x 13.8% 690

Class 1 A contributions are not paid o n the vouchers (Class 1 secondary contributions are payable).

7 The correct answer is:

B Incorrect
The correct answer is:
C Correct
When an individual reaches state pension age they stop paying Class 1 primary contributions but their employer must
still pay Class 1 secondary contributions.

£ 3,712

The only liability is to Class 1 secondary NIC. Cobalt Ltd is not entitled to the employment allowance as the company has
only one director a n d no other employees.
(£36,000 - £9,1 00) x 1 3.8% = £3,71 2

9 The correct answer is:

C £5,368

£
C l a s s i secondary: (£45,000 -£9,100) x 13.8% 4,954

Class 1 A: £3,000 x 13.8% 414

5,368

10
£ 439

£
C l a s s i primary - December 2023

(£4,189 -£1,048) x 12% 377

(£7,300 -£4,189) x 2% 62

Total 439

The benefit in respect of the Christmas party is liable to Class 1 A NIC o n Trim Ltd.
(SAMPLE EXAM)
 £ 239

Class 1 secondary (aged under 21 ) (£52,000 - £50,270) * 1 3.8% 239

Class 1 secondary contributions are not paid o n benefits. Taxable benefits (the car) give rise to a liability to Class 1 A NIC.

12
£ 414

Class 1 A £3,000 x 13.8% 414

£ 161

Class 1 secondary (£46,500 - £9,1 00) x 1 3.8% - £5,000 161

The employment allowance is available even though there is only one employee, as the employer, Hans, is a sole trader
and not a company.

14
£ 0

Kamal is an apprentice under 25 years o l d a n d his remuneration (salary and vouchers) d o not exceed the apprentice
upper secondary threshold of £50,270.

£ 92

Class 1 primary ((£20,000/1 2 + £150} = £1,817 - £1,048) x 12% 92

1 6 The correct answer is:

C £3,555

9% (£50,270 -£12,570) 3,393

2% (£58,350 -£50,270) 162

3,555
9 Capital gains tax - individuals

1 The correct answer is:

D Partners individually
The partnership is not taxable in its own right; rather it is a n amalgamation of individuals effectively taxed as sole
traders. Neither are partners taxed jointly. Every individual is liable to capital gains tax independently. As the asset is
owned by all the partners, each partner must declare their share of any gain o n their own self-assessment return.

2 The correct answer is:

A 15 March 2024
The date of disposal for capital gains purposes is the date o n which the contract for disposal becomes unconditional.
In this case the contract became unconditional o n the date contracts were exchanged. The date legal title passes,
physical possession is obtained, o r payment is made are all irrelevant.

3 The correct answer is:

C Stamp duty land tax paid o n the purchase of land may be deducted as part of cost o n a subsequent disposal of the
land.
Assets which are inherited are treated as being acquired by the donee at their probate value ie, at their value at the
time of the donor's death. This is sometimes known as the tax-free uplift o n death.
Wasting chattels are always exempt from CGT. The £6.000 rule applies to non-wasting chattels.
Where an asset is not sold at arm's length the proceeds are deemed to b e market value at the time of sale o r gift.

4 The correct answer is:

A £(7,800)
As a non-wasting asset, the chattel rules apply. As it was sold a t a loss, actual proceeds are substituted by deemed
proceeds of £6,000 to restrict the loss.

Deemed proceeds 6,000

Less auctioneer's fees (800)

Net sale proceeds 5,200

Less cost (13,000)

Loss (7,800)

5 The correct answer is:

B Exempt
The caravan is a wasting chattel which is an exempt asset.
The correct answer is:
D Exempt
The sculpture is a non-wasting chattel, which is a chargeable asset. However, as it was both bought and sold for less
than £6,000, it is specifically exempt.