Taxation Exam (June 2023)

Taxation Exam (June 2023)

Question 1

Darren has an annual salary of £75 000. They pay 10% of their salary into an occupational pension scheme, with their employer paying 8% into the same scheme.

Darren also pays £60 per month to a gift aid registered charity.

Darren has no other sources of income.

How much of Darren’s salary will fall into the higher rate tax band for 2022/23?

Income tax rates and bands

Normal rates Dividend rates

Tax rates and bands
% %
Starting rate for
£0 - £5 000 0 N/a
savings income
Basic rate £0 - £37 700 20 8.75
Higher rate £37 701 - £150 000 40 33.75
Additional rate £150 001 and over 45 39.35

Allowances £
Personal allowance 12 570

Savings allowance: Basic rate taxpayer 1 000

Higher rate taxpayer 500

Dividend allowance 2 000

Income limit for personal allowances 100 000

Individual savings accounts £

Annual limit 20 000
£10 330
£14 455
£16 330
£16 510

Feedback:

Available Answers
£16 330 (1 Mark)

Correct key 3

3 £
Salary 75000
Pension £75 000 x 10% -7500
PA -12570
Taxable Income 54930
 Basic Rate £37 700 + (£60 x 100/80 38600
x 12)
Higher Rate £54 930 - £38 600 16330

1 Error: Employers contribution deducted from salary

Salary 75000
Pension £75 000 x (10%+8%) -13500
PA -12570
Taxable Income 48930

Basic Rate £37 700 + (£60 x 100/80 x 12) 38600

Higher Rate £48 930 - £38 600 10330

2 Error: Pension treated as PPC £

Salary 75000
Pension
PA -12570
Taxable Income 62430

£37 700 + (£60 x 100/80 x 12) +

Basic Rate 47975
(£7 500 x 100/80)
Higher Rate £62 430 - £47 975 14455

4 Error: Gift Aid payments not grossed £

Salary 75000
Pension £75 000 x 10% -7500
PA -12570
Taxable Income 54930

Basic Rate £37 700 + (£60 x 12) 38420

Higher Rate £54 930 - £38 420 16510
Question 2

The following information relates to the VAT return for Jelly ltd, for the three months ended 30 September 2022. All figures are exclusive of VAT unless otherwise stated.

On 1 August 2022 Jelly ltd bought a car on which VAT of £10 720 was charged. The car is used for business and private purposes.

Maintenance charges on the car totalled £1 820 and fuel costs were £4 180. The car has C02 emissions of 163g/km.

What is the amount of VAT repayable from HMRC in relation to the car for the quarter ended 30 September 2022 to the nearest £?

Scale fuel charges:

Quarterly VAT inclusive scale

Emissions rating (g/km)*
charge £
120 or less £174.00
125 £262.00
130 £279.00
135 £296.00
140 £314.00
145 £332.00
150 £349.00
155 £367.00
160 £385.00
165 £402.00
170 £419.00
175 £437.00
180 £454.00
185 £472.00
190 £490.00
195 £507.00
£815
£1 136
£11 535
£11 856

Feedback:

Available Answers
£1 136 (1 Mark)

Correct key 2

Fuel Scale Charge £385/6 64

Car Costs £6000 x 20% -1200

-1136
1

£
Fuel Scale Charge 385
Car Costs £6000 x 20% -1200
-815

£
Fuel Scale Charge 385
Car Costs £6000 x 20% -1200
Car -10720
-11535

£
Fuel Scale Charge £385/6 64
Car Costs £6000 x 20% -1200
Car -10720
-11856
Question 3

Faiz moved into a new house on 1 August 2022 which cost them £540 000.

The valuation of this property on 1 April 1991 is stated to be £125 000.

Faiz lives alone.

Faiz's local authority has the following council tax amounts for each band:

Band A B C D E F G H
£ 1 206 1 406 1 607 1 808 2 210 2 612 3 014 3 617

What is the council tax payable by Faiz for 2022/23, to the nearest £?

(use months not days for your workings)

Council tax rates

Band £
A up to £40 000
B £40 001 to £52 000
C £52 001 to £68 000
D £68 001 to £88 000
E £88 001 to £120 000
F £120 001 to £160 000
G £160 001 to £320 000
H Over £320 000
£1 306
£1 741
£1 959
£1 808

Feedback:

Available Answers
£1 306 (1 Mark)

Correct answer 1

Council Tax Band F

£2 612 x 8/12 x 75% 1306

Council Tax Band F

£2 612 x 8/12
Error: no single person discount
 3

Council Tax Band F

£2 612 x 75% 1959

Error: not pro rated

Council Tax Band H

£3 617 x 8/12 x 75% 1808
Error: wrong band

Question 4

When considering the residency status of an individual, HMRC applies a variety of tests.

Which one of the following would be a sufficient tie for an individual whose residence cannot be determined by either of the automatic tests?

Spouse resident in the UK

Only home in the UK
Working in the UK for 20 days
In the UK for 200 days during the tax year

Feedback:

Available Answers
Spouse resident in the UK (1 Mark)

Correct answer 1

1 CORRECT
2 Automatically UK resident
2 Need to work in the UK for 45 for tie
4 Automatically UK resident
Question 5

Bailey owns a residential property which is rented out to tenants.

Which one of the following expenses would be allowable in full against rental income?

Interest payments on a loan taken out to purchase the property

Building of a two storey extension at the rear of the property
Capital repayments on a loan taken out to purchase the property
Replacement of furniture in the property

Feedback:

Available Answers
Replacement of furniture in the property (1 Mark)

Correct answer 4

Question 6

Chattels are tangible moveable property which are categorised as wasting or non-wasting.

Which one of the following IS an example of a non-wasting chattel?

A building
A copyright
A watch
A necklace

Feedback:

Available Answers
A necklace (1 Mark)

Correct answer 4
Question 7

A company received the following income from UK sources:

£
Rental Income 35 000
Savings Income 17 000
Dividend Income 23 000

How much of this income will be included in their taxable total profits?

£35 000
£52 000
£58 000
£75 000

Feedback:

Available Answers
£52 000 (1 Mark)

Correct answer 2
Question 8

An employer wishes to reward their employees by giving them benefits which are not subject to tax.

Which one of the following benefits would be subject to tax?

HMRC official interest rate 2%

Approved mileage allowance payments

First 10 000 miles 45p per mile

Over 10 000 miles 25p per mile

Additional passengers 5p per mile per passenger

Loan of £6 000 at 2.5% interest to pay for a holiday

Payment of £3 300 for 11 000 business miles driven in own car
Provision of parking space near to place of work
Staff suggestion award scheme payment of £6 000

Feedback:

Available Answers
Staff suggestion award scheme payment of £6 000 (1 Mark)

Correct answer 4

Workings 1 Interest paid is greater than ORI therefore no benefit

2 Payment is less than the approved mileage allowances therefore no benefit
3 Exempt benefit
4 Maximum award scheme payment is £5 000
Question 9

A company has a year ended 31 December 2022. During the year the business bought machinery for £500 000 and heating and cooling system for £200 000.

What are the maximum capital allowances that can be claimed for the year ended 31 December 2022?

Capital allowances

Structures and building allowance

From April 2020 3%

130% Super Deduction for companies

From 1 April 2021 to 1 April 2023 130%

50% First Year Allowance for companies (Special Rate

Assets)
From 1 April 2021 to 1 April 2023 50%

Annual investment allowance

From 1 January 2019 to 31 March 2023 £1 000 000

Main pool writing down allowance 18%

Special rate pool writing down allowance 6%

Motor cars bought from April 2021 (cars purchased before this date will not be tested
in the exam)
CO2 emissions 0 g/km/electric First year allowance
CO2 emissions between 1 g/km and 50 g/km Main pool
CO2 emissions over 50 g/km Special rate pool
First year allowance 100%

£700 000
£750 000
£850 000
£910 000

Feedback:

Available Answers
£850 000 (1 Mark)

Correct answer 3

£
130% Machinery 500000 *130% 650000
AIA Heating system 200000 *100% 200000
700000 850000
1

£
AIA Machinery 500000 x100% 500000
AIA Heating system 200000 x100% 200000
700000 700000
Error: Machinery given AIA instead of 130%

£
130% Machinery 500000 x130% 650000
50% Heating system 200000 x50% 100000
700000 750000
Error: Heating system given FYA rather than AIA

£
130% Machinery 500000 x130% 650000
130% Heating system 200000 x130% 260000
700000 910000
Error: Heating system given 130% rather than AIA
Question 10

Sandown ltd owns shares in Castle ltd. The transactions in these shares were:

Date Event
03-Mar-09 Purchase of 4 000 shares at £2.50 per share
10-Mar-14 Rights issue of 2 for 1 costing £2 per share. Full rights issue was purchased.
15-Apr-19 Bonus Issue of 1 for 2. Market value of shares was £6.
14-Jun-22 Sale of 4 000 shares at £5 per share.

What is the gain on disposal of the shares on 14 June 2022?

RPI's:
March 2009 211.3
March 2014 254.8
December 2017 278.1

£5 195
£6 839
£13 195
£14 222

Feedback:

Available Answers
£13 195 (1 Mark)

Correct answer 3

£
Proceeds (4 000 x £5) 20000
Indexed Cost -6805
13195

No Cost Ind Cost

£ £
03-Mar-09 4000 10000 10000
IA 10000 x (254.8-211.3)/211.3 2059
10-Mar-14 8000 16000 16000
12000 28059
IA 28059 x (278.1-254.8)/254.8 2566
15-Apr-19 6000 0 0
18000 30625
Disposal -4000 -6805
14000 23820

1
Proceeds (4 000 x £5) 20000
Indexed Cost -14805
5195

No Cost Ind Cost

£ £
03 March 2009 4000 10000 10000
IA 10000 x (254.8-211.3)/211.3 2059
10 March 2014 8000 16000 16000
12000 28059
IA 28059 x (278.1-254.8)/254.8 2566
15 April 2019 6000 36000 36000
18000 66624
Disposal -4000 -14805
14000 51819

Error: Cost included for bonus shares

£
Proceeds (4 000 x £5) 20000
Cost (4 000 x £2.50) -10000
IA 278.1-211.3/211.3 -3161
6839
Error: matched cost of original 4000 shares to disposal

£
Proceeds (4 000 x £5) 20000
Indexed Cost -5778
14222

No Cost Ind Cost

£ £
03 March 2009 4000 10000 10000
10 March 2014 8000 16000 16000
12000 26000
15 April 2019 6000 0 0
18000 26000
Disposal -4000 -5778
14000 20222

Error: no indexation
Question 11

Quarry ltd and Mining ltd are subsidiaries of Gold ltd. Quarry ltd sells goods to Mining ltd for £450 000 when the market value of the goods is £500 000. Quarry ltd recorded a sale of £450 000 and Mining
ltd recorded a purchase of £450 000.

The companies are not exempt from transfer pricing rules.

What adjustment(s) are required in the tax computations for Quarry ltd and Mining ltd in respect of this transaction?

Quarry ltd need to increase their sales by £50 000. Mining ltd need to increase their cost of sales by £50 000.
There is no adjustment required by either company as the net effect is £nil on the group’s profit.
Quarry ltd need to increase their sales by £50 000. No adjustment is required by Mining ltd.
Mining ltd need to increase their cost of sales by £50 000. No adjustment is required by Quarry ltd.

Feedback:

Available Answers
Quarry ltd need to increase their sales by £50 000. Mining ltd need to increase their cost of sales by £50 000. (1 Mark)

Correct answer 1
Question 12

Libby was provided with living accommodation by their employer on 1 August 2022.

The accommodation has the following valuations:

Cost when acquired by the employer on 9 April 2009 £400 000

Market value on 1 August 2022 £600 000
Annual Value £5 900

What is the taxable benefit in kind for Libby for the accommodation for 2022/23?

HMRC official interest rate 2%

£7 000
£8 267
£10 933
£16 400

Feedback:

Available Answers
£10 933 (1 Mark)

Correct answer 3

£
Annual Value 5900
Additional Benefit ((£600000-
10500
75000)x2%)
16400
8 month period 10933

£
Annual Value
Additional Benefit ((£600000-75000)x2%) 10500
10500
8 moth period 7000
Error: Annual Value Excluded

£
Annual Value 5900
Additional Benefit ((£400000-75000)x2%) 6500
12400
8 month period 8267
Error: based on cost

£
Annual Value 5900
Additional Benefit ((£600000-75000)x2%) 10500
16400
Error: not pro-rated
Question 13

Isaac received a salary of £120 760 during 2022/23. During the year, Isaac paid £20 000 into their personal pension scheme.

What is the taxable income of Isaac for 2022/23?

Income tax rates and bands

Normal rates Dividend rates

Tax rates and bands
% %
Starting rate for savings
£0 - £5 000 0 N/a
income
Basic rate £0 - £37 700 20 8.75
Higher rate £37 701 - £150 000 40 33.75
Additional rate £150 001 and over 45 39.35

Allowances £
Personal allowance 12 570
Savings allowance: Basic rate taxpayer 1 000
Higher rate taxpayer 500
Dividend allowance 2 000
Income limit for personal allowances 100 000

Individual savings accounts £

Annual limit 20 000

£83 190
£88 190
£108 190
£120 760

Feedback:

Available Answers
£108 190 (1 Mark)

Correct answer 3

£
Salary 120760

PA 12570 -12570
NI 120760
GPPC -25000
95760
108190
1

£
Salary 120760
GPPC -25000
PA -12570
83190
Error: GPPC deducted from salary

£
Salary 120760
PPC -20000
PA -12570
88190
Error: PPC deducted from salary

£
Salary 120760

PA 12570
NI 120760
PPC -20000
100760
Limit -100000
760 -380 -12190
120760
Error: PPC not grossed up
Question 14

The cash accounting scheme is available for certain persons.

Which person would a cash accounting scheme be suitable for?

A business who regularly receives a VAT refund

A business which buys a significant amount of goods on credit
A business where credit customers are slow to pay
A business with taxable turnover of £2m

Feedback:

Available Answers
A business where credit customers are slow to pay (1 Mark)

Correct answer 3

Question 15

An employment allowance is available for employers to reduce the National Insurance liability.

Which of the following statements with regards to the employment allowance are true?

(i) The allowance applies to the total primary and secondary Class 1 liabilities per tax year

(ii) The allowance only applies to the total secondary Class 1 liability per tax year

(iii) The allowance can generate a National Insurance repayment

(iv) The allowance is £5 000 per tax year

(i), (ii), (iii) and (iv)

(ii), (iii) and (iv) only
(i), (iii) and (iv) only
(ii) and (iv) only

Feedback:

Available Answers
(ii) and (iv) only (1 Mark)

Correct answer 4
Question 16

VAT is an indirect tax which is charged on a wide range of goods and services.

Which one of the following is NOT shown on a less detailed tax invoice for retail supplies?

Tax point
VAT registration number of supplier
Total payable, including VAT
Invoice number

Feedback:

Available Answers
Invoice number (1 Mark)

Correct answer 4
Question 17

A business supplied standard rated goods to a customer.

The customer ordered the goods on 9 April 2022

The business issued an invoice on 15 April 2022

The goods were delivered on 22 April 2022

The customer paid the invoice on 28 April 2022

What is the tax point for the sale?

9 April 2022
15 April 2022
22 April 2022
28 April 2022

Feedback:

Available Answers
15 April 2022 (1 Mark)

Correct answer 2

Question 18

Which one of the following is correct in relation to the incidence of tax?

Direct taxes will have the same formal and effective incidences
Taxes cannot have both a formal and an effective incidence
Direct taxes will have different formal and effective incidences
Indirect taxes will have the same formal and effective incidences

Feedback:

Available Answers
Direct taxes will have the same formal and effective incidences (1 Mark)

Correct answer 1
Question 19

Companies can claim an indexation allowance when computing their chargeable gains.

For Financial Year 2022 which one of the following statements is correct in relation to an indexation allowance?

Indexation allowances can change an unindexed gain to an indexed loss

Indexation allowances are given from date of acquisition to date of disposal
Indexation allowances can increase an unindexed loss
Indexation allowances can reduce an unindexed gain to zero

Feedback:

Available Answers
Indexation allowances can reduce an unindexed gain to zero (1 Mark)

Correct answer 4

Question 20

The UK's transfer pricing legislation details how transactions between connected parties are treated.

In relation to transfer pricing, which one of the following statements is correct?

Transactions must be recorded at a value that would have been made if carried out by unconnected parties
All companies must comply with transfer pricing rules
Transfer pricing only applies to transactions with overseas companies
Large companies are exempt from transfer pricing legislation

Feedback:

Available Answers
Transactions must be recorded at a value that would have been made if carried out by unconnected parties (1 Mark)

Correct answer 1
Question 21

Nitin filed their 2022/23 tax return online on 28 September 2024.

The liability for 2022/23 totalled £25 420.

What are the penalties that Nitin will incur due to the late filing of their tax return?

£100
£1 000
£2 271
£3 542

Feedback:

Available Answers
£2 271 (1 Mark)

Correct answer 3

A £100

B 1000

C 2271

D 3542

Correct Key C

Immediate penalty 100

3-6 months late 900

5% tax liability as >6m 1271

2271

A £

100

immediate penalty only

B £

100
 900

1000

immediate penalty and £900 for 3-6 months late

Immediate penalty 100

3-6 months late 900

10% tax liability 2542

3542
Question 22

Vinnie received an annual salary of £68 000 and total benefits in kind of £14 620 during 2022/23.

What are the Primary Class 1 National Insurance contributions payable by Vinnie for 2022/23 rounded to the nearest £?

Class 1 National Insurance contribution rates

Weekly £ Monthly £ Annual £

Primary threshold 242 1 048 12 570

Secondary
175 758 9 100
threshold

Upper earnings limit 967 4 189 50 270

Employee contribution rates: %

To primary threshold 0

On remainder to upper earnings limit 13.25%

On remainder above upper earnings limit 3.25%

Employer contribution rates: %

To secondary threshold 0

On remainder 15.05%

Employment allowance 5 000

£5 571
£7 272
£7 344
£9 282

Feedback:

Available Answers
£5 571 (1 Mark)
Correct answer 1

A 5571

B 7272

C 7344

D 9282

Correct Key 1

1 (£50 270 - £12 570) x 13.25% 4995.25

(£68 000 - £50 270) x 3.25% 576.225

5571.475

2 (£50 270 - £12 570) x 13.25% 4995.25

(£68 000 + £14 620 - £12 570) x

Error: 2276.625
3.25%

Benefits included 7271.875

3 (£68 000 - £12 570) x 13.25% 7344.475

Error:

Primary threshold unused

(£68 000 + £14 620 - £12 570) x

4 9281.625
13.25%

Error:

Benefits included

Primary threshold unused

Question 23

Companies pay corporation tax on capital gains. Certain expenditure is allowable against the sale when computing the amount chargeable to tax.

Which one of the following is NOT an allowable deduction for a disposal in Financial Year 2022?

Advertising the asset prior to sale

Annual exempt amount of £12 300
Legal fees incurred on the acquisition of the asset
Enhancement expenditure incurred in year of sale

Feedback:

Available Answers
Annual exempt amount of £12 300 (1 Mark)

Correct answer 2

Question 24

Nina ltd owns 100% of the ordinary share capital of Felipe ltd and 75% of the ordinary share capital of Arabella ltd.

Felipe ltd owns 90% of the ordinary share capital of Savannah ltd.

Arabella ltd owns 75% of the share capital of Darcey ltd.

Which companies are in a 75% loss group with Nina ltd?

Felipe ltd, Savannah ltd, Darcey ltd and Arabella ltd

Felipe ltd, Savannah ltd and Arabella ltd only
Felipe ltd and Arabella ltd only
Felipe ltd and Savannah ltd only

Feedback:

Available Answers
Felipe ltd, Savannah ltd and Arabella ltd only (1 Mark)

Correct answer 2
Question 25

Mason has imported goods from a trader based outside of the UK.

Which one of the following is correct in relation to the VAT treatment of this transaction?

The seller will have accounted for the VAT overseas and Mason will not have to pay any VAT in the UK
Mason will pay VAT on the goods regardless of their VAT registration status
Mason will only pay VAT on the goods if they are not registered for VAT
Mason will only pay VAT on the goods if they are registered for VAT

Feedback:

Available Answers
Mason will pay VAT on the goods regardless of their VAT registration status (1 Mark)

Correct answer 2
Question 26

Kizzy runs their own business and for the year ended 31 March 2023, they made an accounting profit of £50 580 before capital allowances.

Analysis of their accounting records showed:

(i) Depreciation deducted totalled £12 360

(ii) Motor expenses deducted totalled £2 480. Private usage of the car was agreed as 40%.

(iii) Capital allowances for the period have been calculated as £18 260

(iv) Capital assets were sold during the year resulting in a loss on disposal of £3 480

What is the taxable profit for Kizzy for the year ended 31 March 2023?

£42 192
£45 672
£49 152
£49 648

Feedback:

Available Answers
£49 152 (1 Mark)

Correct answer 3

D 49648

C 49152

A 42192

B 45672

Correct Key C

Accounting Profit 50580

Add

Depreciation 12360

Motor Expenses (2480 x 40%) 992

Loss on disposal 3480

Less

Capital Allowances -18260

 49152

Accounting Profit 50580

Add

Depreciation 12360

Motor Expenses (2 480* 60%) - incorrect % 1488

Loss on disposal 3480

Less

Capital Allowances -18260

49648

Accounting Profit 50580

Add

Depreciation 12360

Motor Expenses (2480 x 40%) 992

Less

Loss on disposal - incorrectly deducted -3480

Capital Allowances -18260

42192

Accounting Profit 50580

Add

Depreciation 12360
Motor Expenses (2480 x 40%) 992

Loss on disposal - not adjusted

Less

Capital Allowances -18260

45672
Question 27

Finley uses the flat rate scheme for their VAT returns. Their summarised VAT records show the following for the quarter ended 31 December 2022:

Sales (exclusive of VAT) £

Standard Rated 52 460

Zero Rated 6 580

Purchases (exclusive of VAT)

Standard Rated 42 810

HMRC have agreed that the flat rate that applies to Finley is 14%.

What is the amount of VAT payable by Finley for the quarter ended 31 December 2022, to the nearest £?

£2 272
£2 820
£8 543
£9 734

Feedback:

Available Answers
£9 734 (1 Mark)

Correct answer 4

A 2272

B 2820

C 8543

D 9734

Correct Key D

D ((£52 460 x 120%)+£6 580) x 14% 9734

A (£52 460 + £6 580 - £42 810) x 14% 2272

Error(s): VAT not included and input VAT

deducted

B ((£52 460 x 120%) + £8 560 - (£42 810 x 120%)) x 2820

14%
 Error(s): input VAT deducted

C (£52460 + £8 560) x 14% 8543

Error(s): VAT not included

Question 28

Retriever ltd prepares is accounts to the year ended 31 October 2022.

The company owned a house, which it rented out for £3 600 per calendar month. There was a change in tenants during the year and the property was empty during January 2022 after which the rent was
raised to £4 000 per calendar month. Retriever ltd replaced a refrigerator at a cost of £1 500. This was an upgrade and if the refrigerator had been replaced like for like the cost would have been £950.

The property was managed by letting agents who are paid 11% of rental income.

What is the taxable profit from this rental property for the year ended 31 October, assuming Retriever ltd will claim all available reliefs?

£36 948
£37 498
£38 448
£40 702

Feedback:

Available Answers
£37 498 (1 Mark)

Correct answer 2

Correct Key B

Rental Income (£3 600 x 2)+(£4 000 x 9) 43200

Letting agent £43 200 x 11% -4752

Refridgerator -950

37498

A £

Rental Income (£3 600 x 2)+(£4 000 x 9) 43200

Letting agent £43 200 x 11% -4752

Refridgerator -1500

36948

Error: refridgerator at cost not like for like

C £

Rental Income (£3 600 x 2)+(£4 000 x 9) 43200

Letting agent £43 200 x 11% -4752

 Refridgerator

38448

Error: refridgerator not deducted

D £

Rental Income (£3 600 x 3)+(£4 000 x 9) 46800

Letting agent £46 800 x 11% -5148

Refridgerator -950

Error: rental income 12 months rather than 11 40702

Question 29

Four individuals sold items over the past 12 months and all of them have made profits. HMRC is considering each individual to determine if they are trading.

Lily sold their caravan as they were getting married and wanted to use the money for the wedding.

Maisie sold jewellery which they had acquired through inheritance.

Charlie sold furniture which they had acquired from a car boot sale and refurbished before sale.

Sam sold some artwork which they had held for a number of years.

Which of the individuals are likely to be considered as trading by HMRC?

Charlie only
Charlie, Lily, Maisie and Sam
Lily and Sam only
Charlie and Lily only

Feedback:

Available Answers
Charlie only (1 Mark)

Correct answer 1
Question 30

Acourt ltd bought two assets in August 2020 for £3 500 each. The assets were not connected.

Acourt ltd sold one of these assets for £6 500 in May 2022 and the other asset for £5 800 in September 2022.

What is the total unindexed gain on the disposal of these assets?

£833
£3 000
£3 133
£5 300

Feedback:

Available Answers
£833 (1 Mark)

Correct answer 1

A 833

B 3000

C 3133

D 5300

Correct Key A

Proceeds 6500

Cost -3500

3000

Max 5/3(6500-6000) 833 833

Gain on other asset exempt as proceeds and cost <£6,000

B £

Proceeds 6500

Cost -3500

3000
 Error: not using maximum gain on asset

C £ £

Proceeds 6500

Cost -3500

3000

Max 5/3(6500-6000) 833 833

Proceeds 5800

Cost -3500

2300 2300

3133

Error: including asset where cost and proceeds <£6k

D £ £

Proceeds 6500

Cost -3500

3000 3000

Max 5/3(6500-6000) 833

Proceeds 5800

Cost -3500

2300 2300

5300

Error: including asset where cost and proceeds <£6k

Error: not using maximum gain on asset

Question 31

  

Molly ltd has a trading loss for the year ended 31

March 2023.

Molly ltd also has a capital loss for the year ended
31 March 2023.

Molly ltd has been trading for many years and has
property income and investment income in their
corporation tax computations each year. This is the
first time they have made losses so are unsure how
these losses can be relieved.

Requirement

31a) Explain to Molly ltd the option(s) available for

tax relief for each of the losses:

i. Trading Loss (3 marks)

ii. Capital Loss (1 mark)

31b) State two factors that will be taken into

consideration when determining the most beneficial
loss relief options. (1 mark)

(Total 5 marks)

Feedback:

Available Answers
Q31a) (i) (3 Marks)

Available Answers
Q31a) (ii) (1 Mark)

Available Answers
Q31b) (1 Mark)

Marks

Trading Current year claim against total profits for year

(a) (i) 1 CY/Year/Total Profits
Loss ending 31 March 2023.

Current year claim against total profits for year ending 31

March 2023 and then a carry back claim against total 1 CY then PY/Years/Total Profits
profits for year ending 31 March 2022.

Carry forward against total profits for year ending 31

1 CFWD/Years/Total Profits
March 2024 and beyond until all loss relieved.

Marks
(a) (ii) Capital Loss Carried forward and used against future capital gains. 1 CFWD/Future Gains

Marks

Tax rebate for carry back useful if

(b) Considerations 0.5 max 1 mark for part (b)
cashflow issues

Unrelieved charitable donations 0.5

Expected future profits 0.5

Expected future tax rates 0.5

Question 32

  

Martha set up a business on 1 September 2020 and

produced accounts to 30 April each year.

The results for the first few periods being as follows:

Period ended 30 April 2021 £20 000

Year ended 30 April 2022 £35 000

Year ended 30 April 2023 £28 000

Requirement

32a) State the first three tax years that Martha is

trading and explain how the taxable profits will be
calculated for Martha for each of these years. (2
marks)

32b) Calculate Martha’s taxable profits for the first

three tax years of trading. (2 marks)

32c) State the overlap periods and calculate the

overlap profits for Martha’s first three tax years of
trade. (1 mark)

(Total 5 marks)

Feedback:

Available Answers
Q32a) (2 Marks)

Available Answers
Q32b) (2 Marks)

Available Answers
Q32c) (1 Mark)

Marks

(a) 2020/21 Profits assessed on actual basis 0.5

2021/22 As short period the first 12 months of trade will be assessed 1

2022/23 CYB 0.5

Marks

(b) 2020/21 1.9.20-5.4.21 7/8 x £20 000 17500 0.5

 2021/22 1.9.20 - 30.4.21 8/8 x £20 000 20000 0.5

1.5.21 - 31.8.21 4/12 x £35 000 11667 0.5

31667

35000
2022/23 1.5.21 - 30.4.22 12/12 x £35 000 0.5

Marks

(c) 1.9.20 - 5.4.21 7/8 x £20 000 17500 0.5 need to give date and overlap profit for credit.

1.5.21 - 31.8.21 4/12 x £35 000 11667 0.5 need to give date and overlap profit for credit.

29167
Question 33

  

Sonya is looking for new business premises. They

know they will need to pay business rates, National
Non-Domestic Rates (NNDR), but they do not
understand how these rates are determined by the
local authorities.

Business rates

Standard
51.2p
multiplier
Small
business 49.9p
multiplier

Requirement

33a) Explain to Sonya how business rates are

computed with reference to the rateable value and
the NNDR multipliers. (3 marks)

33b) Explain the Small Business Rates Relief that is

available for small businesses when calculating
NNDR. (2 marks)

(Total 5 marks)

Feedback:

Available Answers
Q33a) (3 Marks)

Available Answers
Q33b) (2 Marks)

Marks

NNDR Payable is calculated by multiplying the rateable value by the NNDR

(a) 0.5 mark
multiplier.

The rateable value is set every five years and based on the rental value. 1 mark

(or comment around valuations being in 2010/17 / every 3 years going

forward)
 The standard NNDR multiplier is used for all businesses that have a
1 mark
rateable value exceeding £51 000.

For businesses with a rateable value of less than £51 000 then the small
1 mark max 3 marks
business multiplier is used.

Marks

(b) The relief for small businesses depends on the rateable value:

If rateable value less than £12,000 the rates are calculated using the small
1 mark
business multiplier and then reduced by 100%

If rateable value between £12 000 and £15 000 the relief is reduced by 1%
1 mark
for every £30 in rateable value.
Question 34

  
Please enter your answer below.
There are two requirements for this question - 34a)
Sunita and 34b) Titan Ltd To make sure you answer the question fully, you can
copy the requirements into the answer box below
34a) Sunita using ctrl+c (copy) then ctrl+v (paste) buttons.

Sunita has been trading for many years and is not

registered for VAT. They sell children's clothes
which are a zero-rated product. Their turnover does
not require registration, and is unlikely to in the
future, but they have been advised that they could
voluntarily register for VAT.

Requirement

34a) Explain why Sunita has been advised that they

could register for VAT and the advantages and
disadvantages of doing so. (5 marks)

Tax Tables 2022/23

Value added tax

Rate 20%
Registration
£85 000
limit
De-
registration £83 000
limit

34b) Titan Ltd

Titan ltd makes supplies in one quarter as detailed

below:

Standard Rated supplies (excluding VAT) £95 000

Zero Rated supplies £35 000

Exempt supplies £52 500

Titan ltd suffers input tax during the quarter as

follows:

Attributed to standard rated supplies £6 225

Attributed to zero rated supplies £2 025

Attributed to exempt supplies £4 550

 Unattributed £3 800

Requirement

34b) Using the partial exemption percentage,

calculate the net VAT payable to HMRC for the
quarter. De minimis limits do not need to be
considered. (5 marks)

(Total 10 marks)

Feedback:

Available Answers
Q34a) (5 Marks)

Available Answers
Q34b) (5 Marks)

Marks

Taxable turnover <£85,000 1

Reclaim input VAT 1

No impact on customers 1

Repayment position 1

Admin Burden 1

1 mark for each explained point - other

relevant points

Marks

Output
Tax

Standard rated
£95 000 x 20% 19000 0.5
supplies

Zero rated this mark can be awarded as long as no output

£35 000 x 0% 0 0.5
supplies tax calculated

19000
Input VAT

Attributable to standard
6225
rated supplies

Attributable to zero rated

2025 0.5
supplies

Attributable to exempt this mark can be awarded as long as no input tax

0 0.5
supplies for exempt supplies

Unattributed input
tax

(£95 000 + £35 000) / (£95 000 +

71.23% 1
£35 000 + £52 500)

Rounded 72% 1

£3 800 x 72% 2736 0.5 own figure

10986

Payable to HMRC 8014 0.5 own figure

Question 35

  
Please enter your answer below.
Susie is employed and received a salary of £119 000
during 2022/23. To make sure you answer the question fully, you can
copy the requirements into the answer box below
Susie pays 8% into an occupational pension scheme using ctrl+c (copy) then ctrl+v (paste) buttons.
with their employer paying the same amount into
the scheme. Susie also paid £100 per month into a
private pension scheme.

On 1 June 2022, Susie received a company car

which cost their employer £51 250. It has a list price
of £55 000, CO2 emissions of 160g/km and a diesel
engine which does not meet the RDE2 standards.
Susie paid a capital contribution of £6 000 towards
the car. The employer paid for all the fuel for this car
and Susie made a contribution to this of £55 per
month.

Susie also received the following benefits:

Mobile phone available for private use (£550

cost to employer)
Private medical insurance (£525 cost to
employer)
Summer party (£380 cost to employer per
employee)
Subsidised canteen (£200 cost to employer per
employee)

Susie paid £45 000 tax through PAYE.

Susie received no other income during 2022/23.

Requirement

What is the total tax payable for Susie for 2022/23?

Show any exempt benefits as £0 in your
computations. (10 marks)

(Total 10 marks)

Taxation tables – 2022/23

Income tax rates and bands

Normal
rates
Tax rates and bands
%

Starting rate for savings

£0 - £5 000
income

Basic rate £0 - £37 700 2

 £37 701 - £150
Higher rate 4
000

£150 001 and

Additional rate 4
over

Allowances

Personal allowance

Savings allowance: Basic rate taxpayer

Higher rate taxpayer

Dividend allowance

Income limit for personal allowances

Individual savings accounts £

Annual limit 20 000

Car benefit percentage – electric cars (cars

registered after 6 April 2021) N.B. in the exam cars
registered before this date will not be tested.

Carbon dioxide emissions Electric range (miles)

0g/km

1g/km-50g/km >130

1g/km-50g/km 70-129

1g/km-50g/km 40-69

1g/km-50g/km 30-39

1g/km-50g/km <30

Car benefit percentage – petrol and diesel cars

Carbon dioxide emissions

51g/km to 54 g/km

55g/km to 59g/km

60g/km or more 16 + 1% for every ext

Diesel engines (non RDE2)

 Maximum percentage

Car fuel benefit

Base figure

Feedback:

Available Answers
Q35 (10 Marks)

£ £ Marks

Salary 119000

less occupational pension scheme contribution -9520 0.5

Employers occupation pension scheme contribution 0 0.5

Car list price 55000 0.5

less capital contribution (capped) -5000 0.5

50000

% 15%

(160g/km-55g/km)/5 21% 0.5

Diesel 4% 0.5

40%

mark for identifying 37%

Max 37% 0.5
max

18500

Pro-rate 10 months 15417 0.5 credit for prorate

Fuel £25 300 x 37% x 10/12 7801 1 0.5 for % and % for prorate

Fuel contribution 0 0.5

Mobile Phone 0 0.5

Private medical insurance 525 0.5

Summer party 280 0.5

Subsidised canteen 0 0.5

 133503

Personal Allowance 0 0.5

Taxable Income 133503

Tax Payable £ £

Basic Rate £37 700 + (100/80x(£100x12)) 39200 x 20% 7840 1.5 1 for GPPC and 0.5 for 20%

Higher Rate £133 503 - £39 200 94303 x 40% 37721 0.5 own figure

45561

less PAYE -45000 0.5

IT Payable 561

MAX 10
Question 36

Please enter your answer below.

Question Exhibit - Sunshine Ltd

To make sure you answer the question fully, you can

   copy the requirements into the answer box below
using ctrl+c (copy) then ctrl+v (paste) buttons.
Using the information in the exhibit Sunshine Ltd
above please answer the question below:

Requirement

What are the taxable total profits/(loss) for

Sunshine ltd for the period ended 31 December
2022 assuming maximum capital allowances
claimed? (10 marks)

Show any cost of sales / administrative expenses

items with a 0 (zero) if no adjustment required.

(Total 10 marks)

Capital allowances

Structures and building allowance

From April 2020

Super Deduction for companies

From 1 April 2021 to 1 April 2023

First Year Allowance for companies (Special Rate Assets

From 1 April 2021 to 1 April 2023

Annual investment allowance

From 1 January 2019 to 31 March 2023

Main pool writing down allowance

Special rate pool writing down allowance

Motor cars bought from April 2021 (cars purchased bef

tested in the exam)
CO2 emissions 0 g/km/electric Fi
CO2 emissions between 1 g/km and 50 g/km M
CO2 emissions over 50 g/km Sp

First year
100%
allowance

Feedback:
Available Answers
Q36 (10 Marks)

£ Marks

Operating Profit 246042 0.5 for excluding dividends

Add

Depreciation (30 245 + 10

40495 0.5 for both depreciation adj
250)

Loss on disposal 10546 0.5

Trade debts written off 0 0.5

Increase in general
1500 0.5
provision for doubtful debts

Entertaining customers 3219 0.5

Entertaining staff 0 0.5

Donation to a local charity 0 0.5

Donation to a political party 1500 0.5

Less

Capital allowances -222608 0.5 OF

80694

Main
FYA/AIA SRP Allowances Marks
Pool

£ £ £ £

Balance Bfwd 390 250

Additions

Car 52 000 0.5 for including in SRP

Car 35 000

FYA -35000 35000 0.5 for giving FYA

Van (30 200 x

39260
130%)

P&M (74 500 x

96850
130%)

130% deduction -136110 136110 1 0.5 for each asset given 130%

Disposal -26120
 364130 52000

WDA x 18% x
-49158 49158 1 0.5 for WDA/0.5 for pro rate
9/12

WDA x 6% x 0.5 for WDA / 0.5 for pro rate /

-2340 2340 1.5
9/12 0.5 for not adj for PU

314972 49660 222608

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