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Personal Tax Flashcards

6 cards from real AAT L4 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Personal Tax flashcards as text

  1. A UK taxpayer has total income of £110,000 for 2025/26. By how much is their personal allowance reduced?

    Answer: £5,000

    The personal allowance is reduced by £1 for every £2 of income above £100,000. Income above threshold = £110,000 - £100,000 = £10,000. Reduction = £10,000 / 2 = £5,000. Revised personal allowance = £12,570 - £5,000 = £7,570.

  2. Class 4 National Insurance Contributions for self-employed individuals are calculated on:

    Answer: Trading profits between the lower and upper profits limits

    Class 4 NICs are payable on trading profits between the lower profits limit (£12,570) and upper profits limit (£50,270) at 6%, plus 2% on profits above the upper limit.

  3. A higher rate taxpayer receives UK dividends of £8,000 in 2025/26. The dividend allowance is £500. How much Income Tax is payable on the dividends?

    Answer: £2,531.25

    Taxable dividends = £8,000 - £500 allowance = £7,500. Higher rate dividend tax = 33.75%. Tax = £7,500 x 33.75% = £2,531.25.

  4. Which Capital Gains Tax relief allows deferral of a gain when proceeds are reinvested in qualifying business assets?

    Answer: Business Asset Rollover Relief

    Business Asset Rollover Relief allows a trader to defer a capital gain when proceeds from selling a qualifying business asset are reinvested in a new qualifying asset within 1 year before to 3 years after disposal.

  5. A taxpayer makes a gift of £50,000 on 1 May 2019 and dies on 1 August 2025. The gift is a potentially exempt transfer. What taper relief percentage applies?

    Answer: 20% of the full rate

    The period between gift and death is 6 years and 3 months (6-7 years band). Taper relief for 6-7 years before death reduces the IHT to 20% of the full rate. The bands are: 0-3 years (100%), 3-4 years (80%), 4-5 years (60%), 5-6 years (40%), 6-7 years (20%).

  6. A taxpayer lets a furnished room in their main home and receives rent of £6,500 in 2025/26. Under the Rent a Room scheme, what is the taxable property income?

    Answer: £0

    The Rent a Room scheme exempts the first £7,500 of gross rental income from letting a furnished room in the taxpayer's main home. Since £6,500 is below £7,500, the entire amount is exempt.