ACCA AS Taxation (TX-UK) 2

Question 1

Which of the following is classified as an exempt supply for UK VAT purposes?

Accepted Answer

Insurance services

Answer

Insurance is an exempt supply under UK VAT law (VAT Act 1994, Schedule 9). Exempt supplies are not subject to VAT, but the supplier cannot reclaim input VAT on costs related to making exempt supplies. Other exempt supplies include education, health services, and financial services.

Question 2

An individual makes a potentially exempt transfer (PET) of £400,000 in June 2022 and dies in March 2026. What taper relief percentage applies to reduce the IHT payable on this gift?

Accepted Answer

20% reduction

Answer

The donor died between 3 and 4 years after making the PET. Taper relief reduces the tax payable (not the value of the gift) as follows: 0-3 years: 0%, 3-4 years: 20%, 4-5 years: 40%, 5-6 years: 60%, 6-7 years: 80%. Since the gift was made approximately 3 years and 9 months before death, the 20% taper relief applies.

Question 3

For National Insurance purposes, what is the Class 1 employee primary threshold for 2025/26?

Accepted Answer

£12,570 per annum

Answer

The primary threshold for Class 1 employee NICs for 2025/26 is £12,570 per annum (aligned with the personal allowance). Employees pay NICs at 8% on earnings between the primary threshold (£12,570) and the upper earnings limit (£50,270), and 2% on earnings above the upper earnings limit.

Question 4

A company acquires a machine for £80,000 in its 12-month accounting period ending 31 March 2026. The machine qualifies for the annual investment allowance (AIA). What is the maximum capital allowance the company can claim?

Accepted Answer

£80,000 (full AIA)

Answer

The Annual Investment Allowance (AIA) provides a 100% deduction for qualifying plant and machinery expenditure up to £1,000,000 per year. Since the machine costs £80,000, which is within the AIA limit, the company can claim the full £80,000 as a capital allowance in the period of purchase.

Question 5

Under self-assessment, what is the deadline for filing a paper tax return for the tax year 2025/26?

Accepted Answer

31 October 2026

Answer

For paper tax returns, the filing deadline is 31 October following the end of the tax year. The tax year 2025/26 ends on 5 April 2026, so the paper return must be filed by 31 October 2026. Online returns have a later deadline of 31 January 2027.

ACCA Applied Skills Practice Test

ACCA Applied Skills Practice Test

ACCA AS Taxation (TX-UK) 2