You’re on a roll
Create a free account to save your ACCA progress, track your accuracy by topic, and pick up right where you left off.
Free Questions › ACCA › Advanced Taxation
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 151
The main rate of corporation tax for companies with profits over £250,000 from 1 April 2023 is:
Select an option first.
Correct answer: A — 25%
Explanation: A is correct: from 1 April 2023, the main rate of corporation tax is 25% for companies with augmented profits above £250,000. B is wrong — 19% was the main rate up to 31 March 2023 and is now the small profits rate. C and D are wrong — not the current rates.
Question 152
The small profits rate of corporation tax (profits not exceeding £50,000) is:
Select an option first.
Correct answer: A — 19%
Explanation: A is correct: the small profits rate is 19% for companies whose augmented profits do not exceed the lower limit of £50,000. B is wrong — 25% is the main rate. C and D are wrong.
Question 153
Marginal relief for corporation tax applies when augmented profits fall between:
Select an option first.
Correct answer: A — £50,000 and £250,000
Explanation: A is correct: marginal relief applies to reduce the corporation tax rate from 25% towards 19% when augmented profits fall between £50,000 and £250,000. The formula for marginal relief is: (U − A) × N/A × standard fraction (3/200). A is correct. B, C and D are wrong — these are not the correct limits.
Question 154
The lower limit (£50,000) and upper limit (£250,000) for corporation tax are reduced when a company has associated companies. If a company has 4 associated companies, the limits become:
Select an option first.
Correct answer: A — £10,000 and £50,000
Explanation: A is correct: the limits are divided by the number of companies in the group (including the company itself). With 4 associated companies plus the company itself = 5 companies total. Limits are divided by 5: £50,000/5 = £10,000 and £250,000/5 = £50,000. B is wrong — limits are reduced. C is wrong — dividing by 4 gives £12,500/£62,500. D is wrong — dividing by 5/4 is not correct.
Question 155
A company's augmented profits for corporation tax purposes include:
Select an option first.
Correct answer: B — Taxable total profits plus exempt distributions from non-51% group companies
Explanation: B is correct: augmented profits = taxable total profits (TTP) + exempt dividends received from non-group companies (i.e. dividends from companies in which the paying company holds less than a 51% interest). This determines which rate band applies. A is wrong — augmented profits are broader than TTP. C and D are wrong — these are only components.
Get the full ACCA question bank — free
Drop your email and we'll send you fresh ACCA practice questions, fully worked solutions and exam-deadline reminders. No spam — unsubscribe in one click.
Want to save your score and take a full mock exam? Create a free account →
Question 156
Corporation tax is charged on a company's accounting period. The standard accounting period for CT purposes:
Select an option first.
Correct answer: B — Cannot exceed 12 months — accounting periods over 12 months are split for CT
Explanation: B is correct: for corporation tax, an accounting period cannot exceed 12 months. If a company's accounts cover a period of more than 12 months (e.g. a first period after incorporation), it is split into two accounting periods — the first 12 months and the remainder. A is wrong — APs can be less than 12 months. C is wrong — CT uses accounting periods, not calendar years. D is wrong — Companies House determines the accounts period but CT rules are separate.
Question 157
Under the quarterly instalment payment (QIP) regime for large companies, the first instalment is due:
Select an option first.
Correct answer: A — In the 7th month of the accounting period
Explanation: A is correct: for large companies (CT liability over £10,000 for 12-month AP, with profits over £1.5m after division by associated companies), CT is paid in quarterly instalments. The first instalment is due 6 months and 13 days after the start of the accounting period (effectively in the 7th month). B is wrong — that is a standard payment deadline. C is wrong — not 19 months. D is wrong — QIP companies pay before the normal filing deadline.
Question 158
For corporation tax, which of the following is NOT an allowable deduction in computing trading profits?
Select an option first.
Correct answer: B — Depreciation charged in the accounts
Explanation: B is correct: accounting depreciation is NOT allowable for corporation tax purposes — it is added back and replaced by capital allowances, which are the tax equivalent. A is wrong — salaries are allowable. C is wrong — interest on trading loans is allowable (subject to transfer pricing and thin capitalisation rules). D is wrong — advertising is allowable.
Question 159
The main pool of plant and machinery (excluding special rate assets and single-asset pools) receives a writing-down allowance of:
Select an option first.
Correct answer: A — 18% per year (reducing balance)
Explanation: A is correct: the main pool of qualifying plant and machinery receives a WDA of 18% per year on a reducing balance basis. B is wrong — 25% was the WDA rate pre-2012. C is wrong — 10% was used for long-life assets. D is wrong — not the current rate.
Question 160
The special rate pool (for integral features, long-life assets and certain high CO2 cars) has a WDA of:
Select an option first.
Correct answer: A — 6% per year
Explanation: A is correct: the special rate pool WDA is 6% per year (reducing balance). Special rate pool assets include integral features (electrical, cold water and space heating systems, lifts), long-life assets (economic life exceeding 25 years), and cars with CO2 emissions above 50g/km. B is wrong — 8% was the rate before April 2019. C is wrong — 18% is the main pool rate. D is wrong — not current.
Question 161
A small pool (with a value of £1,000 or less) can receive:
Select an option first.
Correct answer: A — A small pools allowance — written off in full in one year
Explanation: A is correct: where the written-down value of the main pool or special rate pool at the end of an accounting period is £1,000 or less, the full balance can be written off as a small pools allowance. This avoids tiny pools continuing for years. B is wrong — the small pool allowance applies. C is wrong — it is a small pools write-off, not a FYA. D is wrong — it does not have to wait until disposal.
Question 162
The patent box regime for companies allows profits from patented inventions to be taxed at:
Select an option first.
Correct answer: A — 10%
Explanation: A is correct: the patent box allows companies to elect to have profits attributable to qualifying patents taxed at an effective rate of 10% (the patent box rate). The deduction is calculated to reduce the effective CT rate on qualifying profits to 10%. B is wrong — 19% is the standard small profits CT rate. C is wrong — 25% is the main CT rate. D is wrong — 15% is not the patent box rate.
Question 163
Research and development (R&D) relief for large companies (from April 2024 onwards) is:
Select an option first.
Correct answer: B — A 13% above-the-line credit (RDEC)
Explanation: B is correct: from April 2024, the above-the-line credit (RDEC) for large companies provides a taxable credit of 20% (effective benefit after tax = approximately 15% of qualifying R&D costs, net of CT). B is closest — the rate changed to 20% from April 2023. A describes the SME enhanced deduction scheme. C and D are incorrect rates.
Question 164
Group relief for corporation tax allows a company to surrender its trading losses to:
Select an option first.
Correct answer: B — A 75%-group company (where there is a 75% economic and ownership relationship)
Explanation: B is correct: group relief requires a 75% group relationship — broadly, company A is in a group with company B if company A (or its parent) holds at least 75% of the ordinary share capital of company B (and has a 75% entitlement to profits and assets). A is wrong — the 75% test must be met. C is wrong — any shareholding is insufficient. D is wrong — associated companies use the 50% test, not group relief.
Question 165
Consortium relief allows a member of a consortium to:
Select an option first.
Correct answer: A — Surrender or claim losses to/from the consortium company on a proportional basis
Explanation: A is correct: consortium relief allows a member of a consortium (who owns at least 5% of the consortium company) to surrender or claim losses in proportion to their ownership percentage in the consortium company. A correctly describes the proportional basis. B is wrong — consortium relief is limited by ownership percentage. C is wrong — no 200% enhancement. D is wrong — relief is limited proportionally.
Question 166
A company with a year-end of 31 March 2024 has augmented profits of £400,000. The corporation tax is due:
Select an option first.
Correct answer: B — By 1 January 2025 (9 months and 1 day after period end) — standard payment date
Explanation: B is correct: for non-large companies, CT is payable 9 months and 1 day after the end of the accounting period. For a 31 March 2024 year-end: 31 March 2024 + 9 months 1 day = 1 January 2025. A is wrong — QIP applies to large companies (profits >£1.5m for 12-month AP). C is wrong — not at the period end. D is wrong — not in July.
Question 167
The loan relationship rules govern the tax treatment of:
Select an option first.
Correct answer: B — A company's borrowings and lending (interest, gains and losses on financial instruments treated as loans)
Explanation: B is correct: the loan relationship rules (in CTA 2009) apply to all financial instruments that give rise to interest, discount or premium — broadly all corporate debt. Both the debits (interest payable and losses) and credits (interest receivable and gains) are brought in on an accruals basis. A is wrong — it covers all lending/borrowing, not just bank loans. C and D are wrong — loan relationships are a separate code.
Question 168
A company makes a charitable donation to a qualifying charity. For corporation tax purposes, the donation is:
Select an option first.
Correct answer: B — Deductible as a charge on income (qualifying donation), reducing taxable total profits
Explanation: B is correct: qualifying charitable donations (Gift Aid donations) by companies are deductible as charges on income — they reduce taxable total profits. A is wrong — qualifying donations are deductible. C is wrong — gifts to EEA charities may also qualify. D is wrong — no minimum threshold.
Question 169
The intangible assets regime for companies allows the deduction of:
Select an option first.
Correct answer: B — Amortisation of intangible fixed assets in line with the accounting treatment (or on an elected fixed rate basis)
Explanation: B is correct: under CTA 2009 Part 8, companies can deduct amortisation of intangible fixed assets (acquired from April 2002) in line with the accounting treatment. Alternatively, companies can elect to deduct at a fixed 4% per year. A is wrong — amortisation is deductible. C is wrong — capital allowances apply to P&M, not intangibles. D is wrong — full cost deduction in year of acquisition is not the general rule.
Question 170
Transfer pricing rules require UK companies to compute their profits on the basis of:
Select an option first.
Correct answer: B — The arm's length price — the price that would have been agreed between independent parties
Explanation: B is correct: transfer pricing rules (under TIOPA 2010) require that transactions between connected companies (including UK-UK transactions above certain thresholds) are computed using the arm's length principle — as if the transaction had been made on commercial terms between unrelated parties. A is wrong — the actual price may differ from arm's length. C is wrong — lower of cost/market is an accounting concept. D is wrong — HMRC does not set the price (though they can adjust it).
Question 171
Thin capitalisation rules apply when:
Select an option first.
Correct answer: B — A company has excessive debt from connected parties, causing interest deductions that exceed what an independent lender would provide
Explanation: B is correct: thin capitalisation is a specific application of transfer pricing rules — where a connected party lends to a company at a level (or rate) that an independent lender would not agree, the excess interest is not deductible for UK tax purposes. B correctly describes this. A, C and D are wrong — thin capitalisation is about debt levels and interest deductibility.
Question 172
A controlled foreign company (CFC) charge applies to a UK company that:
Select an option first.
Correct answer: B — Controls a foreign company that does not pay tax at a rate at least 75% of the UK CT rate, and the CFC has 'chargeable profits' attributed to UK-diverted profits
Explanation: B is correct: the CFC regime charges UK parent companies on their share of the CFC's chargeable profits — broadly, profits that have been diverted from the UK using artificial arrangements. The charge applies if the CFC is not paying at least 75% of the UK CT rate and certain 'gateway' provisions are met. A is wrong — a lower rate alone does not trigger the CFC charge (exemptions may apply). C and D are wrong — they don't describe CFC.
Question 173
UK dividends received by a company from another UK company are generally:
Select an option first.
Correct answer: B — Exempt from corporation tax under the dividend exemption
Explanation: B is correct: most dividends received by UK companies from UK companies are exempt from corporation tax under the dividend exemption in CTA 2009 Part 9A. The main conditions are based on the payer/recipient relationship and anti-avoidance provisions. A is wrong — not trading income. C is wrong — if taxable, CT would apply but dividends are generally exempt. D is wrong — no withholding on UK-to-UK dividends.
Question 174
The UK's participation exemption (for large groups holding a substantial shareholding) allows:
Select an option first.
Correct answer: B — Exemption from CT on gains from the disposal of qualifying shares — the substantial shareholding exemption (SSE)
Explanation: B is correct: the Substantial Shareholding Exemption (SSE — TCGA 1992 Sch 7AC) exempts companies from corporation tax on gains on disposal of qualifying shares, provided certain conditions are met (including holding at least 10% of the ordinary share capital for at least 12 months before disposal). A is wrong — SSE is CT (not personal CGT). C is wrong — the exemption is 100%. D is wrong — SSE is not about SDLT.
Question 175
For SSE purposes, the investee company must be:
Select an option first.
Correct answer: B — A trading company (or a holding company of a trading group) immediately before disposal and after a qualifying period
Explanation: B is correct: for the SSE, the investee company must be a trading company (or holding company of a trading group) both throughout the qualifying 12-month ownership period and at the time of disposal. A is wrong — dormant companies do not qualify. C is wrong — SSE applies to both listed and unlisted companies. D is wrong — SSE applies to UK and overseas companies.
Question 176
A company's trading loss in an accounting period can be:
Select an option first.
Correct answer: A — Carried forward and set against total profits of future periods (including non-trading income) under the new rules
Explanation: A is correct: under the current rules (post April 2017), trading losses carried forward can be set against total profits (including non-trading income and gains) of future periods — subject to a 50% deduction allowance for profits above £5 million. A is correct. B is wrong — post-2017 losses can be set against total profits. C is wrong — c/f is permitted. D is wrong — only UK group companies can receive surrendered losses.
Question 177
The deduction allowance for carried-forward losses in companies is:
Select an option first.
Correct answer: A — £5 million per year (group allowance)
Explanation: A is correct: the deduction allowance is £5 million per year (for a group — allocated among group members). Above this, only 50% of remaining profits can be sheltered by carried-forward losses. For standalone companies, the £5 million allowance applies in full. A is correct. B is wrong — £1 million is not the deduction allowance for corporation tax. C is wrong — the 50% restriction applies above £5 million. D is wrong — not £500,000.
Question 178
A close company is broadly a UK company controlled by:
Select an option first.
Correct answer: A — 5 or fewer participators, or any number of participators who are directors
Explanation: A is correct: a close company is one that is under the control of 5 or fewer participators (or any number of participators who are also directors). Most private limited companies are close companies. B is wrong — close company refers to private control, not government. C is wrong — residence of participators is not the test. D is wrong — public companies are generally not close companies.
Question 179
A benefit provided by a close company to a participator (that is not a director/employee) is:
Select an option first.
Correct answer: B — Treated as a distribution and subject to the participator's income tax on dividends
Explanation: B is correct: a benefit provided by a close company to a participator who is not also a director/employee is treated as a distribution — charged to income tax at the participator's dividend tax rates. The company cannot deduct the cost. A is wrong — it is taxable. C is wrong — not deductible. D is wrong — must be reported.
Question 180
The section 455 charge arises when a close company:
Select an option first.
Correct answer: B — Makes a loan to a participator or an associate of a participator
Explanation: B is correct: s455 CTA 2010 imposes a CT charge (currently 33.75% of the outstanding loan balance) when a close company makes a loan to a participator (or their associate). This is a temporary CT charge — it is repaid by HMRC when the loan is repaid or written off. A is wrong — dividends trigger income tax on the recipient, not s455. C is wrong — remuneration is separately considered. D is wrong — penalties apply for late filing.
More free ACCA topics
Management Accounting401
Financial Accounting400
Corporate and Business Law400
Performance Management400
Financial Reporting400
Financial Management400
Strategic Business Reporting400
Advanced Financial Management400
Advanced Performance Management400
Business and Technology300
Taxation300
Audit and Assurance300
Strategic Business Leader300
Advanced Audit and Assurance296
Ten questions in
- The ones you miss are saved as a drill you can repeat
- Your place is kept, on this device and any other
- A streak, if that is the thing that gets you back tomorrow
Every question on this page stays free and open either way.