AAT L4 Personal Tax (UK Income Tax) 2 — Questions and Answers
Question 1: Self-assessment tax returns for individuals are due to be filed online by:
- 31 October following the tax year end
- 31 January following the tax year end (Correct answer)
- 5 April following the tax year end
- 6 April following the tax year end
Correct answer: 31 January following the tax year end
For online (electronic) filing, the self-assessment return must be submitted by 31 January following the end of the tax year (e.g., 31 January 2025 for 2023/24). Paper returns are due by 31 October.
Question 2: Payments on account for income tax are made on:
- 31 January and 31 July (Correct answer)
- 5 April and 31 October
- 31 March and 30 September
- 31 December and 30 June
Correct answer: 31 January and 31 July
Two payments on account are due: the first on 31 January during the tax year, and the second on 31 July after the tax year end. Each is 50% of the previous year's income tax liability (after deducting tax deducted at source).
Question 3: A balancing payment for self-assessment income tax is due on:
- 31 January during the tax year
- 31 July after the tax year end
- 31 January after the tax year end (Correct answer)
- 5 April following the tax year end
Correct answer: 31 January after the tax year end
The balancing payment is the difference between the total income tax due and the payments on account already paid. It is due on 31 January following the tax year end — at the same time as the first payment on account for the following year.
Question 4: Property income for UK income tax purposes is:
- Always exempt from income tax
- Assessed as the gross rent received with no deductions
- Assessed as rental receipts minus allowable property expenses, with the finance cost restriction on residential lettings (Correct answer)
- Taxed only when a property is sold
Correct answer: Assessed as rental receipts minus allowable property expenses, with the finance cost restriction on residential lettings
Property income = rental receipts minus allowable expenses (repairs, insurance, management fees, letting agent fees). Finance costs (mortgage interest) on residential lets are restricted — relief is given as a basic rate tax reducer rather than a deduction.
Question 5: The trading income basis for an individual's self-employment is calculated as:
- Cash receipts minus cash payments
- Adjusted profit after adding back disallowable expenditure and deducting allowable reliefs (Correct answer)
- Sales minus direct costs only
- Net profit per the accounts without any adjustments
Correct answer: Adjusted profit after adding back disallowable expenditure and deducting allowable reliefs
Self-employment trading income starts with the accounting profit and adjusts: add back disallowable expenditure (e.g., depreciation, personal expenses, entertaining); deduct capital allowances; arrive at the tax-adjusted trading profit.
Question 6: The cash basis of accounting is available as an option for self-employed individuals with annual receipts below:
- £10,000
- £50,000
- £150,000 (Correct answer)
- £300,000
Correct answer: £150,000
From 2024/25, the cash basis is the default for sole traders and partnerships with receipts up to £150,000. Previously it was optional for those with receipts up to £150,000. Larger businesses can opt in.
AAT L4 Personal Tax (UK Income Tax) 2
Self-assessment tax returns for individuals are due to be filed online by: