ACA Tax Compliance (UK) 3 — Questions and Answers
Question 1: The UK corporation tax payment deadline for a large company (paying by instalments) is based on:
- 9 months and 1 day after the end of the accounting period
- The self-assessment deadline of 31 January
- Quarterly instalments during and after the accounting period (Correct answer)
- Within 30 days of the tax computation being filed
Correct answer: Quarterly instalments during and after the accounting period
Large companies pay corporation tax in four quarterly instalments: two during the accounting period and two after. Very large companies pay even earlier instalments.
Question 2: Which relief allows trading losses to be set against total income of the current or preceding accounting period for UK corporation tax?
- Group relief
- Terminal loss relief
- Loss carry-forward relief
- Current year and carry-back relief (Correct answer)
Correct answer: Current year and carry-back relief
Under CTA 2010, a company can claim relief for a trading loss against total profits of the current period and, if not fully relieved, carry back to the previous 12 months. Extended carry-back was available for COVID years.
Question 3: Entrepreneurs' Relief (now Business Asset Disposal Relief) reduces the CGT rate to:
- 5%
- 10% (Correct answer)
- 18%
- 20%
Correct answer: 10%
Business Asset Disposal Relief (BADR) applies a 10% CGT rate on qualifying gains from disposal of a business or business assets, subject to a lifetime limit (£1 million).
Question 4: For UK employment income purposes, the employer's Class 1 National Insurance rate above the secondary threshold is:
- 8%
- 12%
- 13.8%
- 15% (Correct answer)
Correct answer: 15%
From April 2025, the employer's Class 1 NIC rate increased to 15% on earnings above the secondary threshold (£5,000 per year from April 2025), announced in the October 2024 Budget.
Question 5: For UK self-employed individuals, Class 4 NIC is charged on profits between the lower profits limit and upper profits limit at:
- 5%
- 6%
- 8% (Correct answer)
- 9%
Correct answer: 8%
Class 4 NICs are charged at 6% on profits between £12,570 and £50,270 following the reduction from 9% in 2024. Above £50,270, Class 4 NICs are charged at 2%.
Question 6: The UK gift aid scheme allows a basic rate taxpayer to make a donation whereby:
- The donor claims a tax credit of 20%
- The charity reclaims basic rate tax from HMRC, grossing up the donation (Correct answer)
- The donor deducts the full donation from their income
- The government matches the donation pound for pound
Correct answer: The charity reclaims basic rate tax from HMRC, grossing up the donation
Under gift aid, the charity reclaims 20% basic rate tax from HMRC, effectively grossing up the net donation by 25%. Higher/additional rate taxpayers can also claim higher rate relief via self-assessment.
ACA Tax Compliance (UK) 3
The UK corporation tax payment deadline for a large company (paying by instalments) is based on: