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Free ACCA Advanced Taxation Practice Questions & Answers
400 exam-style Advanced Taxation questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 271
The capital gains tax annual exempt amount for individuals in 2024/25 is:
Select an option first.
Correct answer: A — £3,000
Explanation: A is correct: the annual exempt amount (AEA) for individuals was reduced from £6,000 to £3,000 from 6 April 2024 (having previously been reduced from £12,300 to £6,000 in 2023/24). B is wrong — £6,000 was 2023/24. C is wrong — £12,300 was 2022/23. D is wrong — £1,500 is the AEA for most trusts in 2024/25.
Question 272
The CGT rate for basic rate taxpayers on non-residential property gains (from 30 October 2024) is:
Select an option first.
Correct answer: A — 18%
Explanation: A is correct: from 30 October 2024, CGT rates on non-residential property and other assets increased from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher/additional rate taxpayers. A is correct for basic rate. B is wrong — 10% was the pre-30 October 2024 rate. C is wrong — 20% was the old higher rate. D is wrong — 24% is the new higher rate, not basic.
Question 273
The CGT rate for higher and additional rate taxpayers on non-residential property gains (from 30 October 2024) is:
Select an option first.
Correct answer: A — 24%
Explanation: A is correct: from 30 October 2024, the CGT rate on non-residential property for higher/additional rate taxpayers increased to 24%. B is wrong — 28% was the rate on residential property for higher rate taxpayers (now also 24%). C is wrong — 20% was the pre-30 October 2024 rate. D is wrong — 18% is the new basic rate.
Question 274
CGT rates on residential property (for higher/additional rate taxpayers) from 6 April 2024 are:
Select an option first.
Correct answer: A — 24%
Explanation: A is correct: from 6 April 2024, CGT rates on residential property for higher/additional rate taxpayers were reduced from 28% to 24%. B is wrong — 28% was the rate before 6 April 2024. C is wrong — 18% is the basic rate for residential property. D is wrong — 20% was the old standard higher rate on non-residential gains.
Question 275
The Business Asset Disposal Relief (BADR) rate from 6 April 2025 to 5 April 2026 is:
Select an option first.
Correct answer: A — 14%
Explanation: A is correct: BADR rate was increased from 10% to 14% from 6 April 2025. A is correct for 2025/26. B is wrong — 10% was the rate up to 5 April 2025. C is wrong — 20% is not the BADR rate. D is wrong — 18% is the new standard basic rate CGT, not BADR.
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Question 276
The lifetime limit for Business Asset Disposal Relief is:
Select an option first.
Correct answer: A — £1,000,000
Explanation: A is correct: the BADR lifetime limit is £1 million — the total gains qualifying for BADR in an individual's lifetime cannot exceed £1 million. B is wrong — £10 million was the original limit before being reduced in 2020. C and D are wrong — these are not the BADR lifetime limits.
Question 277
For BADR to apply on a disposal of shares in a personal company, the individual must:
Select an option first.
Correct answer: A — Hold at least 5% of the company's ordinary share capital, be an officer or employee, and satisfy the 2-year qualifying period
Explanation: A is correct: for BADR on shares, the individual must: (1) hold at least 5% of ordinary share capital AND 5% of voting rights; (2) be an employee or officer (director) of the company; (3) be entitled to at least 5% of distributable profits and assets on winding up; and (4) satisfy the 2-year qualifying period. A captures the key conditions. B is wrong — 51% and 1 year are incorrect. C is wrong — employment/officership alone is insufficient. D is wrong — 25% and 5 years are not the thresholds.
Question 278
The principal private residence (PPR) relief exempts from CGT gains on:
Select an option first.
Correct answer: B — A dwelling that has been the individual's only or main residence throughout the period of ownership (or all but the last 9 months)
Explanation: B is correct: PPR relief exempts the gain on a property that was the individual's only or main residence throughout ownership. The last 9 months of ownership always qualifies (even if not in residence), provided it was at some point the main residence. A is wrong — investment properties do not qualify for PPR. C is wrong — duration of ownership alone does not give PPR. D is wrong — investment properties are the opposite of qualifying.
Question 279
The final period exemption for PPR gives exempt treatment to the gain accruing in the last:
Select an option first.
Correct answer: A — 9 months of ownership
Explanation: A is correct: the final period exemption is 9 months — the last 9 months of ownership always qualify for PPR even if the owner is not in residence (e.g. they have moved into a new home). B is wrong — 36 months was the old final period. C is wrong — 24 months was the old final period. D is wrong — 18 months is not the current period.
Question 280
Letting relief under PPR is now only available when:
Select an option first.
Correct answer: B — The owner is in shared occupancy with the tenant (i.e. the property is occupied by the owner AND tenant at the same time)
Explanation: B is correct: from 6 April 2020, letting relief was restricted — it is now only available where the owner occupies the property at the same time as the tenant. The maximum relief is the lower of (a) the PPR exempt amount, (b) the gain in the letting period and (c) £40,000. B is correct. A is wrong — shared occupancy is required. C is wrong — duration alone is insufficient. D is wrong — the gain exceeding £40,000 is not the trigger.
Question 281
The taper of the gain for private residence purposes when a property has been partly used for business is based on:
Select an option first.
Correct answer: B — A time-based apportionment — business use periods (not the final 9 months) give rise to a chargeable gain on the business-use proportion
Explanation: B is correct: where part of a private residence is used exclusively for business, PPR is restricted — the exempt proportion relates to the residential use. The business-use proportion is charged to CGT on a time × floor area basis. B correctly describes the approach. A is wrong — rooms are relevant but the apportionment uses floor area not rooms count. C is wrong — rental income is separate. D is wrong — it is primarily time-based.
Question 282
Rollover relief (replacement of business assets) defers a CGT gain when:
Select an option first.
Correct answer: A — An asset is disposed of and the proceeds are reinvested in qualifying replacement assets within 1 year before or 3 years after the disposal
Explanation: A is correct: rollover relief (TCGA 1992 s152) requires the disposal and acquisition to be of qualifying business assets, and reinvestment within the window of 1 year before to 3 years after the disposal. The gain is deferred by reducing the base cost of the replacement asset. A is correct. B is wrong — qualifying business assets are required. C is wrong — the new asset need not be the same type (both must be qualifying assets but can be different types). D is wrong — gifts involve a different relief (holdover).
Question 283
Holdover relief for gifts of business assets allows:
Select an option first.
Correct answer: A — The donor to defer the gain; the donee takes over the donor's base cost
Explanation: A is correct: holdover relief under TCGA 1992 s165 allows the donor to defer a CGT gain on a gift of a qualifying business asset — the donee takes the asset at the donor's original cost (reduced by the held-over gain). On the donee's future disposal, the gain re-emerges. A is correct. B is wrong — it is deferred, not exempt. C is wrong — the full gain is held over. D is wrong — the deferral is indefinite, not 10 years.
Question 284
Investors' Relief gives a reduced CGT rate on disposal of qualifying unquoted shares. From 6 April 2025, the rate is:
Select an option first.
Correct answer: A — 14%
Explanation: A is correct: Investors' Relief rate increased to 14% from 6 April 2025 (in line with BADR). The lifetime limit was also reduced to £1 million (matching BADR). A is correct. B is wrong — 10% was the rate to 5 April 2025. C is wrong — 20% is not the IR rate. D is wrong — 18% is the new standard basic rate.
Question 285
Enterprise Investment Scheme (EIS) shares disposed of after 3 years attract:
Select an option first.
Correct answer: A — CGT exemption on the gain (if EIS income tax relief was given and not withdrawn)
Explanation: A is correct: EIS shares held for at least 3 years and on which income tax relief has not been withdrawn are exempt from CGT on disposal. Any loss on disposal (after deducting the income tax relief given) can be used as an allowable loss. A is correct. B is wrong — the gain is exempt, not taxed at 18%. C is wrong — the exemption is 100%, not 50%. D is wrong — both gain exemption and loss relief are available.
Question 286
The nil rate band (NRB) for inheritance tax is:
Select an option first.
Correct answer: A — £325,000
Explanation: A is correct: the IHT nil rate band has been fixed at £325,000 since 2009 and is frozen (under current policy) until April 2030. No IHT is payable on the first £325,000 of a taxable estate. B is wrong — £500,000 can be achieved if the residential nil rate band also applies. C is wrong — £250,000 is not the NRB. D is wrong — £400,000 is not the NRB.
Question 287
The standard rate of inheritance tax on the estate above the nil rate band is:
Select an option first.
Correct answer: A — 40%
Explanation: A is correct: the standard IHT rate is 40% on the taxable estate above the available nil rate band(s). A is correct. B is wrong — 20% is the rate on lifetime chargeable transfers from individuals (half the death rate). C is wrong — 25% is not the IHT rate. D is wrong — 36% is the reduced rate when 10% or more of the net estate is left to charity.
Question 288
The reduced IHT rate of 36% applies when:
Select an option first.
Correct answer: A — The deceased leaves 10% or more of their net estate (above NRB and other deductions) to qualifying charities
Explanation: A is correct: where 10% or more of the 'baseline amount' of the taxable estate (net of reliefs and exemptions but before the charitable legacy) is left to qualifying charities, the IHT rate on the non-charitable part is reduced from 40% to 36%. A is correct. B is wrong — trusts are a different consideration. C is wrong — estate size is not the test. D is wrong — domicile affects the scope but not the 36% reduced rate condition.
Question 289
The residential nil rate band (RNRB) for 2024/25 is:
Select an option first.
Correct answer: A — £175,000 per individual
Explanation: A is correct: the RNRB is £175,000 per individual. It applies when a qualifying residential property is left to direct descendants (children, grandchildren etc.). The combined NRB + RNRB = £325,000 + £175,000 = £500,000 per person (or up to £1 million for a married couple using both allowances). B, C and D are wrong.
Question 290
The RNRB is tapered when the net estate (after deducting liabilities and reliefs but before IHT exemptions) exceeds:
Select an option first.
Correct answer: A — £2 million — reduced by £1 for every £2 above this threshold
Explanation: A is correct: the RNRB is tapered at £1 for every £2 of net estate above £2 million. So the RNRB is fully withdrawn when the net estate exceeds £2 million + (2 × £175,000) = £2.35 million. A is correct. B, C and D are wrong thresholds.
Question 291
Spouse exemption for IHT allows transfers to a UK-domiciled spouse or civil partner:
Select an option first.
Correct answer: A — Of unlimited value, provided both are UK domiciled
Explanation: A is correct: transfers between spouses or civil partners, where both are UK domiciled (or the recipient spouse is UK domiciled), are completely exempt from IHT — with no upper limit. A is correct. B is wrong — the unlimited exemption applies. C is wrong — no IHT charge on inter-spouse transfers. D is wrong — the exemption applies to both lifetime and death transfers.
Question 292
Annual exemption for lifetime IHT gifts is:
Select an option first.
Correct answer: A — £3,000 per tax year (rolling, with unused carried forward for 1 year)
Explanation: A is correct: the annual IHT exemption is £3,000 per tax year. If unused in a tax year, the unused amount can be carried forward to the next tax year only. A is correct. B, C and D are wrong amounts.
Question 293
Potentially exempt transfers (PETs) for IHT are gifts between:
Select an option first.
Correct answer: A — Individuals that are only taxable if the donor dies within 7 years
Explanation: A is correct: PETs are lifetime gifts made by individuals (not companies or trusts) to other individuals. They are treated as potentially exempt — if the donor survives 7 years from the date of the gift, the PET becomes completely exempt from IHT. If the donor dies within 7 years, the PET becomes chargeable. A is correct. B is wrong — companies make chargeable lifetime transfers. C is wrong — gifts to trusts are CLTs. D is wrong — PETs are only exempt after 7 years.
Question 294
Taper relief on PETs reduces the IHT on failed PETs (where the donor dies within 7 years) as follows:
Select an option first.
Correct answer: A — 0–3 years: no reduction; 3–7 years: progressively increasing reductions (20% to 80% reduction)
Explanation: A is correct: taper relief applies to PETs (and CLTs) where the donor dies within 7 years. The tax is reduced as follows: death 3–4 years after gift = 20% reduction; 4–5 years = 40% reduction; 5–6 years = 60% reduction; 6–7 years = 80% reduction. Within 3 years, no taper relief applies. A correctly describes the framework. B is wrong — not a flat 50%. C is wrong — full exemption requires surviving 7 years. D is wrong — there is no 100% to 0% switch at 3 years.
Question 295
Business Property Relief (BPR) at 100% is available on:
Select an option first.
Correct answer: A — Unquoted shares in a qualifying trading business held for at least 2 years
Explanation: A is correct: 100% BPR is available on: (a) unquoted shares in a qualifying trading business (including AIM-listed shares treated as unquoted); (b) unincorporated business or interest in a partnership. The 2-year ownership requirement applies. A is correct. B is wrong — listed shares get only 50% BPR. C is wrong — land owned by the individual but used by the company gets 50% BPR. D is wrong — cash (unless working capital) is not a qualifying asset.
Question 296
Business Property Relief (BPR) at 50% is available on:
Select an option first.
Correct answer: B — Quoted shares in a company controlled by the transferor, land/buildings owned personally but used in the transferor's business
Explanation: B is correct: 50% BPR is available on: (a) quoted shares in a company that the transferor controls; (b) land, buildings, machinery or plant used in a partnership or company the transferor controls; and (c) assets in a relevant business subject to a binding contract for sale. B correctly describes these. A is wrong — unquoted shares get 100%. C is wrong — cash does not qualify. D is wrong — investment companies do not qualify for BPR.
Question 297
Agricultural Property Relief (APR) at 100% is available on:
Select an option first.
Correct answer: A — Agricultural land let on a FBT (Farm Business Tenancy) or vacant and farmed by owner
Explanation: A is correct: 100% APR is available on: (a) owner-occupied agricultural property (land farmed by the owner or short tenancy); (b) land let on a Farm Business Tenancy (FBT) granted on or after 1 September 1995. The 2-year (owner-occupied) or 7-year (tenanted) ownership requirement applies. A is correct. B is wrong — tenure affects the rate. C is wrong — offices are not qualifying agricultural property. D is wrong — only qualifying agricultural land.
Question 298
From 6 April 2026, BPR and APR combined will be subject to a cap of:
Select an option first.
Correct answer: A — £1 million per person for 100% relief — anything above this gets 50% relief (effective IHT rate 20% on the excess)
Explanation: A is correct: from 6 April 2026, the combined 100% BPR/APR relief will be capped at £1 million per person (or £2 million for a couple using transferred allowances). The excess above the cap will attract only 50% relief, giving an effective IHT rate of 20% on that excess. A is correct. B is wrong — the cap is being introduced. C is wrong — £500,000 is not the cap. D is wrong — £2 million is the couples' combined allowance.
Question 299
The IHT charge on a lifetime chargeable transfer (CLT) made by an individual during their lifetime is:
Select an option first.
Correct answer: A — 20% (half the death rate, paid by the donor) or 25% if the trustees pay
Explanation: A is correct: CLTs (typically gifts into discretionary trusts) are charged at 20% during the lifetime of the donor (where the donor pays the IHT), or at the effective rate of 25% where the trustees (not the donor) pay the IHT (because the IHT is then also part of the transfer). If the donor dies within 7 years, additional IHT may be payable (topped up to 40%). A is correct. B is wrong — 40% is the death rate, not lifetime CLT rate. C and D are wrong.
Question 300
The seven-year rule for CLTs means that CLTs made more than 7 years before death:
Select an option first.
Correct answer: A — Fall out of the estate entirely — no IHT effect
Explanation: A is correct: CLTs made more than 7 years before death are not brought into the death estate and do not use up any of the nil rate band available at death. They are 'clear' after 7 years. A is correct. B is wrong — they fall out after 7 years. C is wrong — they are exempt after 7 years. D is wrong — taper relief only applies to deaths within 7 years.
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