ACA Tax Compliance — Questions and Answers
Question 1: For the 2025/26 UK tax year, what is the personal allowance for an individual with total income below £100,000?
- £12,570 (Correct answer)
- £12,500
- £11,850
- £10,000
Correct answer: £12,570
The personal allowance for 2025/26 remains at £12,570. This is the amount of income an individual can earn before paying income tax. The allowance is reduced by £1 for every £2 of income above £100,000, meaning it is fully eliminated at £125,140.
Question 2: A UK sole trader has adjusted trading profits of £60,000 for the tax year 2025/26. How much Class 4 National Insurance is payable (assuming standard rates of 6% on profits between £12,570 and £50,270, and 2% above £50,270)?
- £2,262.00
- £2,456.60 (Correct answer)
- £3,600.00
- £2,456.00
Correct answer: £2,456.60
Class 4 NIC: On profits £12,570 to £50,270 = £37,700 × 6% = £2,262. On profits £50,270 to £60,000 = £9,730 × 2% = £194.60. Total = £2,262 + £194.60 = £2,456.60.
Question 3: Under UK tax law, which of the following is an exempt supply for VAT purposes?
- Sale of children's clothing
- Supply of insurance services (Correct answer)
- Sale of food from a restaurant
- Supply of construction services for a new dwelling
Correct answer: Supply of insurance services
Insurance services are exempt from VAT under Schedule 9 of the VAT Act 1994. This means no VAT is charged on insurance premiums, but the insurer cannot reclaim input VAT on related costs. Children's clothing is zero-rated (not exempt), restaurant food is standard-rated, and new dwelling construction is zero-rated.
Question 4: A UK company has taxable profits of £300,000 for its accounting period ending 31 March 2026. At the main rate of corporation tax of 25%, what is the corporation tax liability?
- £75,000 (Correct answer)
- £57,000
- £60,000
- £50,000
Correct answer: £75,000
For profits above £250,000 the main rate of corporation tax of 25% applies with no marginal relief. Corporation tax = £300,000 × 25% = £75,000. Companies with profits between £50,000 and £250,000 benefit from marginal relief.
Question 5: By what date must a self-assessment tax return for the 2025/26 tax year be filed online to avoid an automatic late filing penalty?
- 31 October 2026
- 31 January 2027 (Correct answer)
- 5 April 2027
- 31 March 2027
Correct answer: 31 January 2027
Online self-assessment tax returns for the 2025/26 tax year (ending 5 April 2026) must be filed by 31 January 2027. Paper returns have an earlier deadline of 31 October 2026. A £100 penalty applies automatically for late filing even if no tax is due.
Question 6: Which of the following capital expenditures qualifies for the Annual Investment Allowance (AIA)?
- A car purchased for business use
- Plant and machinery for a factory (Correct answer)
- A residential property bought for letting
- Goodwill acquired in a business purchase
Correct answer: Plant and machinery for a factory
The AIA provides 100% first-year relief on qualifying expenditure on plant and machinery (up to the annual limit, currently £1 million). Cars are excluded from AIA (they have separate capital allowance rules), residential property is not plant, and goodwill is an intangible asset with its own tax treatment.
ACA Tax Compliance
For the 2025/26 UK tax year, what is the personal allowance for an individual with total income below £100,000?