Taxation (TX-UK) Flashcards

For the tax year 2025/26, what is the personal allowance for an individual with adjusted net income of £90,000?

Answer: £12,570

The personal allowance for 2025/26 is £12,570. It is only reduced when adjusted net income exceeds £100,000. Since £90,000 is below this threshold, the individual receives the full personal allowance. The reduction is £1 for every £2 of income above £100,000, meaning it is fully lost at £125,140.

James sold a residential property in August 2025 that was not his main residence. By what date must he file a capital gains tax return and make a payment on account to HMRC?

Answer: Within 60 days of completion

Since 27 October 2021, UK residential property disposals that are not covered by private residence relief must be reported to HMRC within 60 days of completion, with a payment on account of the CGT due. This applies to UK residents disposing of residential property where there is a gain to report.

Which of the following is an allowable deduction when computing property income for a UK landlord?

Answer: Finance costs (given as a basic rate tax reduction)

For individual landlords, finance costs (mortgage interest) are no longer deductible from property income but are instead given as a basic rate (20%) tax reduction. This means higher and additional rate taxpayers receive less relief than they did under the old rules. Capital repayments, extensions, and purchase costs are capital expenditure and not allowable revenue deductions.

An employee receives a company car with a list price of £30,000 and CO2 emissions of 120 g/km. The appropriate percentage for this emission level is 29%. What is the taxable car benefit for the tax year?

Answer: £8,700

The car benefit is calculated as: List price × Appropriate percentage = £30,000 × 29% = £8,700. The taxable benefit is based on the car's list price (not market value or cost to employer) multiplied by the percentage determined by the car's CO2 emissions. Higher emissions result in a higher percentage and therefore a higher tax charge.

For corporation tax purposes, what is the main rate of corporation tax for a company with augmented profits exceeding £250,000 for the financial year 2025?

Answer: 25%

From 1 April 2023, the main rate of corporation tax is 25% for companies with augmented profits exceeding £250,000. Companies with profits of £50,000 or less pay 19% (small profits rate), and those between £50,000 and £250,000 benefit from marginal relief.

Sarah has chargeable gains of £45,000 and allowable capital losses brought forward of £10,000 in 2025/26. She has no other income. What is her taxable gain after the annual exempt amount (AEA)?

Answer: £31,700

Chargeable gains of £45,000 minus capital losses brought forward of £10,000 = £35,000. Then deduct the annual exempt amount (AEA) for 2025/26 of £3,300: £35,000 − £3,300 = £31,700 taxable gain. Note: losses brought forward are set against gains before the AEA is applied.