Tax Compliance Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Tax Compliance flashcards as text
A UK taxpayer receives gross dividends of £20,000 in 2025/26. After the £1,000 dividend allowance, how is the remaining £19,000 taxed if the taxpayer is a higher rate (40%) taxpayer?
Answer: At 33.75%
For the 2025/26 tax year, dividends received by higher rate taxpayers above the £1,000 dividend allowance are taxed at 33.75%. Basic rate taxpayers pay 8.75% and additional rate taxpayers pay 39.35% on dividend income above the allowance.
Under the UK CGT rules for 2025/26, what is the annual exempt amount for individuals?
Answer: £3,000
The CGT annual exempt amount for individuals was reduced to £3,000 for 2024/25 onwards (from £6,000 in 2023/24 and £12,300 in 2022/23). This is the amount of capital gains an individual can realise each year before CGT becomes payable.
A UK employer provides an employee with a company car with a list price of £30,000 and a CO2 emission rate that gives a benefit percentage of 28%. What is the annual car benefit charge?
Answer: £8,400
The car benefit charge = List price × Appropriate percentage = £30,000 × 28% = £8,400. This amount is added to the employee's taxable income. The employee then pays income tax on this benefit at their marginal rate.
Under Making Tax Digital (MTD) for Income Tax, which taxpayers are required to maintain digital records and submit quarterly updates to HMRC?
Answer: Self-employed individuals and landlords with qualifying income above the threshold
MTD for Income Tax applies to self-employed individuals and landlords with qualifying income above the threshold (initially £50,000, then extending to lower thresholds). They must use compatible software to maintain digital records and submit quarterly updates to HMRC.
A chargeable gain of £50,000 arises on the sale of a qualifying business asset. What rate of CGT applies if Business Asset Disposal Relief (formerly Entrepreneurs' Relief) is claimed?
Answer: 10%
Business Asset Disposal Relief (BADR) applies a CGT rate of 10% on qualifying gains up to the lifetime limit of £1 million. This relief is available for disposals of all or part of a business, shares in a personal trading company, or assets used in a partnership business, subject to qualifying conditions.
For VAT purposes, what is the current standard rate of VAT in the UK?
Answer: 20%
The UK standard rate of VAT is 20%, which has been in effect since 4 January 2011. The reduced rate is 5% (applying to items such as domestic fuel and power), and certain supplies such as food and children's clothing are zero-rated at 0%.