ACCA SP Advanced Taxation (UK)

Question 1

Under UK corporate tax rules, the participation exemption (substantial shareholding exemption, SSE) applies when:

Accepted Answer

A company sells shares in a trading company in which it has held at least 10% for 12 consecutive months within the preceding six years

Answer

The SSE exempts from corporation tax gains on disposal of shares in qualifying trading companies where the seller has held at least 10% for 12 continuous months within the six years preceding disposal.

Question 2

In the context of UK income tax, which of the following is subject to the 'high income child benefit charge'?

Accepted Answer

Individuals with adjusted net income over £60,000 who or whose partner claims child benefit

Answer

The high income child benefit charge (HICBC) applies where either the claimant or their partner has adjusted net income over £60,000 (increased from £50,000 for 2024/25). A 1% charge applies for every £200 over the threshold.

Question 3

Which of the following correctly describes UK 'entrepreneurs' relief' (now Business Asset Disposal Relief, BADR)?

Accepted Answer

A 10% CGT rate on qualifying business asset gains up to a lifetime limit of £1 million

Answer

BADR provides a reduced 10% CGT rate on qualifying business asset disposals (e.g., shares in personal trading companies) up to a lifetime limit of £1 million, incentivising entrepreneurship.

Question 4

Under the UK controlled foreign company (CFC) rules, a charge arises when:

Accepted Answer

A UK resident company controls an overseas company that pays tax at a low rate and has UK-source profits diverted to it

Answer

CFC rules (TIOPA 2010) tax UK controlling companies on the undistributed profits of overseas subsidiaries that are subject to low tax, where those profits have been artificially diverted from the UK.

Question 5

Which of the following is a feature of the UK's 'patent box' regime?

Accepted Answer

Profits derived from patented inventions are taxed at a reduced 10% corporation tax rate

Answer

The patent box regime taxes qualifying profits attributable to UK and European Economic Area patents at 10% rather than the main 25% rate, incentivising IP development in the UK.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Advanced Taxation (UK)