AAT L4 Business Tax (UK Corporation Tax) 4

Question 1

Capital allowances on a motor car with CO2 emissions above 50g/km (but not zero emissions) are claimed using:

Accepted Answer

Special rate pool at 6% WDA

Answer

Cars with CO2 emissions of 51g/km or above are allocated to the special rate pool (6% WDA reducing balance). Zero-emission cars qualify for 100% first year allowance; cars emitting 1–50g/km go into the main pool (18%).

Question 2

The transfer pricing rules in the UK require:

Accepted Answer

Related party transactions to be priced as if they were between independent parties at arm's length, with adjustments if not

Answer

UK transfer pricing rules (TIOPA 2010) require transactions between connected parties to be priced on arm's length terms; if actual prices differ, HMRC can adjust profits to what they would have been on arm's length terms.

Question 3

For the purposes of the substantial shareholding exemption (SSE), gains on disposal of shares in trading subsidiaries are exempt from CT when:

Accepted Answer

The investing company has held at least 10% of the ordinary shares for at least 12 months in the 6 years before disposal

Answer

SSE exempts CT on gains from selling shares in qualifying trading companies where the investor holds at least 10% of ordinary shares and has done so for at least 12 months in the 6 years before disposal.

Question 4

Under the UK research and development tax relief regime from April 2024 (merged scheme), the additional deduction for qualifying R&D expenditure is:

Accepted Answer

20% (total 120% deduction)

Answer

From April 2024, the merged R&D scheme provides a 20% additional deduction (total 120%) for most companies, replacing the separate SME and RDEC regimes. A higher rate applies for R&D-intensive SMEs.

Question 5

For corporation tax purposes, a company is 'associated' with another company when:

Accepted Answer

One company controls the other, or both are under common control

Answer

Companies are associated for CT purposes when one controls the other or both are under the common control of the same person or persons, affecting the limits for marginal relief and instalment payment thresholds.

AAT Level 4 Practice Test

AAT Level 4 Practice Test

AAT L4 Business Tax (UK Corporation Tax) 4