Unofficial practice for the ACCA Taxation (TX-UK) exam. Not affiliated with or endorsed by ACCA.
TX-UK is a 3-hour computer-based exam in three sections, worth 100 marks in total. Every question is compulsory, and the tax rates, allowances and information on certain reliefs are given in the exam.
| Length | 3 hours, computer based |
|---|---|
| Section A | 15 objective test questions of 2 marks, 30 marks |
| Section B | 3 case style questions, each with 5 objective test questions, 30 marks |
| Section C | One 10-mark and two 15-mark constructed response questions, 40 marks |
| Pass mark | 50% |
| Legislation | Finance Act 2025: tax year 2025-26, financial year 2025 |
15 objective test questions of 2 marks each. They can cover any area of the syllabus.
3 case style questions, each with 5 objective test questions of 2 marks based around a common scenario. Each question is marked on its own.
One 10-mark and two 15-mark constructed response questions. ACCA's study guide says the two 15-mark questions focus on income tax (syllabus area B) and corporation tax (area E); the other questions can cover any area. The exam has both computational and discursive elements, and all workings should be shown in Section C.
3 hours for 100 marks is 1.8 minutes a mark: about 54 minutes for Section A, 54 for Section B, 27 for each 15-mark question and 18 for the 10-mark question.
Employment income and benefits
On 6 April 2025 Ines owed £60,000 on a loan from her employer. She repaid £20,000 on 6 August 2025 and £15,000 on 6 January 2026. She paid interest of £600 on the loan during the tax year 2025-26.
HMRC has elected for the benefit to be computed on the actual balance outstanding in each month.
What is Ines's taxable benefit from the loan for the tax year 2025-26? (2 marks)
The corporation tax liability
Halden Ltd started trading on 1 June 2025 and prepared its first accounts for the ten months ended 31 March 2026. Its taxable total profits for the period are £98,000 and it received dividends of £7,000 from non-group companies. It has no related 51% group companies.
What is Halden Ltd's corporation tax liability for the ten months ended 31 March 2026? (2 marks)
VAT: registration, the return and input VAT
Jonah started trading on 1 May 2025. His monthly taxable supplies, none of which are exempt, are shown below.
A trader must notify HMRC within 30 days of the end of the month in which taxable supplies for the previous 12 months (or since trading began) first exceed the registration limit, and is registered from the first day of the second month after that month end.
| Month | Standard rated (£) | Zero rated (£) |
|---|---|---|
| May 2025 | 4,100 | 1,200 |
| June 2025 | 4,600 | 1,300 |
| July 2025 | 5,200 | 1,400 |
| August 2025 | 5,900 | 1,500 |
| September 2025 | 6,300 | 1,600 |
| October 2025 | 6,800 | 1,600 |
| November 2025 | 7,100 | 1,700 |
| December 2025 | 7,400 | 1,800 |
| January 2026 | 7,900 | 1,800 |
| February 2026 | 8,200 | 1,900 |
| March 2026 | 8,400 | 2,300 |
| April 2026 | 8,600 | 2,400 |
By what date must Jonah notify HMRC, and from what date is he registered for VAT? (2 marks)
15 objective test questions in Section A, 3 case style questions of 5 objective test questions in Section B, and 3 constructed response questions in Section C: 30 objective test questions and 3 longer questions.
3 hours for 100 marks, computer based. ACCA's study guide says time is set aside before the exam starts to explain its instructions.
ACCA's study guide says the two 15-mark questions focus on income tax (area B) and corporation tax (area E). The 10-mark question can cover any area.
The supplementary instructions and the tax rates and allowances, as the exam provides them (Finance Act 2025).
| Normal rates | Dividend rates | ||
|---|---|---|---|
| Basic rate | £1 – £37,700 | 20% | 8·75% |
| Higher rate | £37,701 – £125,140 | 40% | 33·75% |
| Additional rate | £125,141 and over | 45% | 39·35% |
| Savings income nil rate band – Basic rate taxpayers | £1,000 | ||
| Savings income nil rate band – Higher rate taxpayers | £500 | ||
| Dividend nil rate band | £500 |
A starting rate of 0% applies to savings income where it falls within the first £5,000 of taxable income.
| £ | |
|---|---|
| Personal allowance | 12,570 |
| Transferable amount | 1,260 |
| Income limit | 100,000 |
Where adjusted net income is £125,140 or more, the personal allowance is reduced to zero.
| Days in UK | Previously resident | Not previously resident |
|---|---|---|
| Less than 16 | Automatically not resident | Automatically not resident |
| 16 to 45 | Resident if 4 UK ties (or more) | Automatically not resident |
| 46 to 90 | Resident if 3 UK ties (or more) | Resident if 4 UK ties |
| 91 to 120 | Resident if 2 UK ties (or more) | Resident if 3 UK ties (or more) |
| 121 to 182 | Resident if 1 UK tie (or more) | Resident if 2 UK ties (or more) |
| 183 or more | Automatically resident | Automatically resident |
Where income is between £60,000 and £80,000, the charge is 1% of the amount of child benefit received for every £200 of income over £60,000.
| The relevant base level of CO2 emissions is 55 grams per kilometre. | |
| The percentage rates applying to petrol cars (and diesel cars meeting the RDE2 standard) with CO2 emissions up to this level are: | |
| 51 grams to 54 grams per kilometre | 16% |
|---|---|
| 55 grams per kilometre | 17% |
| The percentage for electric cars with zero CO2 emissions is 3%. | |
| For hybrid-electric cars with CO2 emissions between 1 and 50 grams per kilometre, the electric range of the car is relevant: | |
| Electric range | |
| 130 miles or more | 3% |
| 70 to 129 miles | 6% |
| 40 to 69 miles | 9% |
| 30 to 39 miles | 13% |
| Less than 30 miles | 15% |
The base figure for calculating the car fuel benefit is £28,200.
The company van benefit scale charge is £4,020, and the van fuel benefit is £769.
Vans producing zero CO2 emissions have a 0% benefit.
The overall investment limit is £20,000.
The rent-a-room relief limit is £7,500.
| Annual allowance – 2022–23 | £40,000 |
|---|---|
| – 2023–24 to 2025–26 | £60,000 |
| Minimum allowance | £10,000 |
| Income limit | £260,000 |
The maximum contribution which can qualify for tax relief without any earnings is £3,600.
| Up to 10,000 miles | 45p |
|---|---|
| Over 10,000 miles | 25p |
| Plant and machinery | |
| Main pool | 18% |
|---|---|
| Special rate pool | 6% |
| Cars | |
| New cars with zero CO2 emissions | 100% |
| Second-hand cars with zero CO2 emissions | 18% |
| CO2 emissions between 1 and 50 grams per kilometre | 18% |
| CO2 emissions over 50 grams per kilometre | 6% |
| Annual investment allowance | |
| Rate of allowance | 100% |
| Expenditure limit | £1,000,000 |
| Enhanced capital allowances for companies | |
| Main pool first year allowance | 100% |
| Special rate pool first year allowance | 50% |
| Structures and buildings allowance | |
| Straight-line allowance | 3% |
Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income.
| Financial year | 2023 | 2024 | 2025 |
|---|---|---|---|
| Small profits rate | 19% | 19% | 19% |
| Main rate | 25% | 25% | 25% |
| Lower limit | £50,000 | £50,000 | £50,000 |
| Upper limit | £250,000 | £250,000 | £250,000 |
| Standard fraction | 3/200 | 3/200 | 3/200 |
(Upper limit – augmented profits) x standard fraction x taxable total profits / augmented profits
| Profit threshold | £1,500,000 |
|---|
| Standard rate | 20% |
|---|---|
| Registration limit | £90,000 |
| Deregistration limit | £88,000 |
| Days late | Penalty |
|---|---|
| Up to 15 days | None |
| 16 to 30 days | 3% |
| More than 30 days | 6% plus a daily penalty at an annual rate of 10% |
| Nil rate band | £325,000 |
|---|---|
| Residence nil rate band | £175,000 |
| Rate of tax on excess – Lifetime rate | 20% |
| – Death rate | 40% |
| Years before death | Percentage reduction |
|---|---|
| More than 3 but less than 4 years | 20% |
| More than 4 but less than 5 years | 40% |
| More than 5 but less than 6 years | 60% |
| More than 6 but less than 7 years | 80% |
| Lower rate | 18% |
|---|---|
| Higher rate | 24% |
| Annual exempt amount | £3,000 |
| Lifetime limit – business asset disposal relief | £1,000,000 |
|---|---|
| – investors’ relief | £1,000,000 |
| Rate of tax | 14% |
| Class 1 Employee | £1 – £12,570 per year | Nil |
|---|---|---|
| £12,571 – £50,270 per year | 8% | |
| £50,271 and above per year | 2% | |
| Class 1 Employer | £1 – £5,000 per year | Nil |
| £5,001 and above per year | 15% | |
| Employment allowance | £10,500 | |
| Class 1A | 15% | |
| Class 4 | £1 – £12,570 per year | Nil |
| £12,571 – £50,270 per year | 6% | |
| £50,271 and above per year | 2% |
| Official rate of interest | 3·75% |
|---|---|
| Rate of interest on underpaid tax | 8·50% |
| Rate of interest on overpaid tax | 3·50% |
| Taxpayer behaviour | Maximum penalty | Minimum penalty – unprompted disclosure | Minimum penalty – prompted disclosure |
|---|---|---|---|
| Deliberate and concealed | 100% | 30% | 50% |
| Deliberate but not concealed | 70% | 20% | 35% |
| Careless | 30% | 0% | 15% |