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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 391
The SDLT 'linked transactions' aggregate rule is prevented from applying where:
Select an option first.
Correct answer: B — The transactions are genuinely separate and unrelated — not subject to the same arrangements or between the same parties in the same scheme
Explanation: B is correct: linked transactions arise when a series of transactions form part of the same arrangement, or are between the same parties (or connected parties) in the same scheme. Where transactions are genuinely separate and unrelated — with different buyers and sellers and no connection — the linked transactions rules do not apply. B is correct. A is wrong — linked rules can apply even between the same parties. C is wrong — location does not determine linking. D is wrong — timing alone does not prevent linking.
Question 392
For IHT, the chargeable value of a gift is:
Select an option first.
Correct answer: B — The loss to the donor's estate — the reduction in the total value of the donor's estate as a result of making the gift (which may differ from the value of the asset received by the donee)
Explanation: B is correct: IHT uses the 'loss to the estate' principle — the chargeable value is the reduction in the value of the transferor's estate, not necessarily the value of what the recipient receives. For example, if selling part of a block of shares reduces the remaining shares' value, the loss to estate may exceed the proceeds. B is correct. A is wrong — may differ from the asset value received. C and D are wrong — loss to estate principle applies.
Question 393
The investor's relief conditions require the shares to be:
Select an option first.
Correct answer: A — Subscribed for newly-issued ordinary shares in an unlisted (or AIM-listed) trading company, held for at least 3 years, with the investor not being an employee or officer of the company
Explanation: A is correct: Investors' Relief requires: (1) newly subscribed ordinary shares in an unlisted (or AIM-listed treated as unquoted) trading company; (2) held for at least 3 years (from April 2016 or date of issue if later); (3) the investor must NOT be an employee or officer during the 3-year period. A is correct. B is wrong — 3 years and unlisted conditions required. C is wrong — listed company shares generally don't qualify. D is wrong — ordinary shares only.
Question 394
For IHT, the RNRB is available only when:
Select an option first.
Correct answer: B — A qualifying residential property is inherited by lineal descendants (children, grandchildren, step-children etc.) — and the property must have been the deceased's residence at some point
Explanation: B is correct: the RNRB requires: (a) a qualifying residential property (one that was at some point the deceased's home); (b) the property is inherited by direct descendants (lineal descendants including step-children and adopted children). B is correct. A is wrong — only qualifying residential property counts. C is wrong — not all assets; one qualifying property is enough. D is wrong — no minimum period of residence required.
Question 395
For CGT, the period in which an individual is living and working abroad (which does not qualify as final period exemption) in relation to their UK home is:
Select an option first.
Correct answer: B — May be exempt if the period overseas is within the deemed occupation rules (e.g. any period working abroad under contract is deemed occupation, capped at 4 years; periods before and after must be periods of actual occupation)
Explanation: B is correct: deemed occupation rules allow certain periods of non-residence to be treated as occupation for PPR purposes: (a) any period of employment outside the UK is deemed occupation (no time limit — but must be preceded and followed by actual occupation, unless the individual cannot return due to the employment); (b) other absences (general) up to 3 years; (c) living there by reason of work elsewhere up to 4 years. B captures the key principle. A is wrong — deemed occupation rules exempt some periods. C is wrong — 4 years (for employment), not 2. D is wrong — not automatically the final period.
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Question 396
For IHT, a company that qualifies as a 'trading company' for BPR must:
Select an option first.
Correct answer: B — Not be wholly or mainly carrying on investment activities — a business that is mainly trading (more than 50% of its activity is trading) qualifies, even if some investment activity exists
Explanation: B is correct: BPR is denied to businesses that are wholly or mainly investment businesses (holding investments, making and holding investments). A company qualifies if trading activity is more than 50% of the total activity (measured by assets, income and time). B is correct. A is wrong — some investment income is acceptable. C is wrong — employee count is not the test. D is wrong — UK incorporation is not required.
Question 397
The CGT base cost of shares acquired under SAYE (save as you earn) share option schemes on exercise is:
Select an option first.
Correct answer: A — The option price (which can be set at up to 20% below market value at grant)
Explanation: A is correct: SAYE options allow employees to buy shares at a price set at grant (which can be discounted by up to 20% below the market value at grant). On exercise, no income tax arises (if the scheme is approved). The base cost for CGT is the option price paid. A is correct. B is wrong — market value at exercise is not the base cost. C is wrong — grant date market value is not the base cost. D is wrong — the option price is paid.
Question 398
For CGT purposes, where a company buys back its own shares and the transaction qualifies for capital treatment (meeting all conditions), the shareholder's gain is computed as:
Select an option first.
Correct answer: B — Buy-back proceeds minus base cost of shares (original cost) — capital gain taxable at CGT rates with BADR potentially available
Explanation: B is correct: where a company buyback of its own shares qualifies for capital treatment (meeting the conditions: unquoted trading company, UK resident, 5+ year holding, etc.), the shareholder computes a capital gain: proceeds minus base cost. BADR may also be available if conditions are met. B is correct. A is wrong — base cost is subtracted, not subscription price alone (if shares were inherited or acquired at different prices). C is wrong — if capital treatment conditions are met, it is not income. D is wrong — a gain may arise.
Question 399
Under the post-April 2025 IHT changes, from 6 April 2027, pension death benefits will:
Select an option first.
Correct answer: B — Be brought within the scope of IHT — pension funds (on the death of the member) will be included in the deceased's estate for IHT purposes (subject to the nil rate band and other reliefs)
Explanation: B is correct: from 6 April 2027 (as announced), most pension death benefits will be brought within the scope of IHT. Currently, pension pots are outside the IHT estate (a significant planning tool). From 2027, they will be included in the deceased's estate, subject to the nil rate band and other reliefs. B is correct. A is wrong — the current exempt position is changing. C is wrong — standard IHT rates (40%) will apply. D is wrong — no spouse restriction on the change.
Question 400
For SDLT, the rates for non-residential property in 2024/25 are:
Select an option first.
Correct answer: A — 0% on the first £150,000; 2% on £150,001 to £250,000; 5% above £250,000
Explanation: A is correct: SDLT rates for non-residential and mixed-use property in England are: 0% on the first £150,000; 2% on the next £100,000 (£150,001 to £250,000); 5% on anything above £250,000. A is correct. B is wrong — not a flat rate. C is wrong — rates do apply above £150,000. D is wrong — 20% is not the SDLT rate.
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