Tx-Uk Mock 1

Taxation (UK)
Mock Two
Taxation
(United Kingdom)
TX-UK
Mock Exam 2 Questions
(FA2022)
Time allowed: 3 hours 15 minutes
This examination is divided into three sections:

Section A
• 15 questions worth 2 marks each
Section B
• Three questions (each containing five objective test 2 mark
questions), worth 10 marks each
Section C
• One 10 mark and two 15 mark questions
All questions are compulsory
Tax rates and allowances are included on pages 2 - 5

SUPPLEMENTARY INSTRUCTIONS
Calculations and workings need only be made to the nearest £.

All apportionments should be made to the nearest month.
All workings should be shown in Section C.
TAX RATES AND ALLOWANCES
The following tax rates and allowances are to be used in answering the questions.
The following tax rates and allowances are to be used in answering the questions.
Income tax
Normal Dividend
rates rates
Basic rate £1 – £37,700 20% 8.75%
Higher rate £37,701 – £150,000 40% 33.75%
Additional rate £150,001 and over 45% 39.35%
Savings income nil rate band – Basic rate taxpayers £1,000

– Higher rate taxpayers £500
Dividend nil rate band £2,000
A starting rate of 0% applies to savings income where it falls within the first £5,000 of taxable
income.
Personal allowance
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.
Residence status
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
Child benefit income tax charge
Where income is between £50,000 and £60,000, the charge is 1% of the amount of child benefit
received for every £100 of income over £50,000.
2
© 2023 ACCA TX-UK Mock 2 Questions
Car benefit percentage
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 15%

55 grams per kilometre 16%
The percentage for electric cars with zero CO2 emissions is 2%.
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 2%
70 to 129 miles 5%
40 to 69 miles 8%
30 to 39 miles 12%
Less than 30 miles 14%
Car fuel benefit
The base figure for calculating the car fuel benefit is £25,300.
Company van benefits
The company van benefit scale charge is £3,600, and the van fuel benefit is £688.
Vans producing zero emissions have a 0% benefit.
Individual savings accounts (ISAs)
The overall limit is £20,000.
Pension scheme limits
Annual allowance £40,000

Minimum allowance £4,000
Threshold income limit £200,000
Income limit £240,000
Lifetime allowance £1,073,100
The maximum contribution that can qualify for tax relief without any earnings is £3,600.
Authorised mileage allowances: cars
Up to 10,000 miles 45p

Over 10,000 miles 25p
3
Capital allowances: rates of allowance
Plant and machinery

Main pool 18%
Special rate pool 6%
Motor cars
New cars with zero CO2 emissions 100%
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 allowances for companies

Main pool super deduction 130%
Special rate pool first year allowance 50%
Commercial structures and buildings

Straight-line allowance 3%
Cash basis of accounting
Revenue limit £150,000
Cap on income tax reliefs
Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income.
Corporation tax
Rate of tax - Financial Year 2022 19%
- Financial Year 2021 19%
- Financial Year 2020 19%
Profit threshold £1,500,000
Value added tax (VAT)

Standard rate 20%
Registration limit £85,000
Deregistration limit £83,000
Inheritance tax: tax rates

Nil rate band £325,000
Residence nil rate band £175,000
Excess – Death rate 40%
– Lifetime rate 20%
Inheritance tax: taper relief

Years before death Percentage
reduction
Over 3 but less than 4 years 20%
Capital gains tax

Normal Residential
rates property
Rates of tax – Lower rate 10% 18%
– Higher rate 20% 28%
Annual exempt amount £12,300
4
Capital gains tax: business asset disposal relief (formerly entrepreneurs’ relief) and
investors’ relief
Lifetime limit – business asset disposal relief £1,000,000

- investors’ relief £10,000,000
Rate of tax 10%
National insurance contributions
Class 1 Employee £1 to £12,570 per year Nil

£12,571 to £50,270 per year 13.25%
£50,271 and above per year 3.25%
Class 1 Employer £1 to £9,100 per year Nil

Employment allowance £5,000
Class 1A 15.05%
Class 2 £3.15 per week
Lower profits limit £12,570
Class 4 £1 to £12,570 per year Nil

£12,571 to £50,270 per year 10.25%
Rates of interest (assumed)

Official rate of interest 2.00%
Rate of interest on underpaid tax 3.25%
Rate of interest on overpaid tax 0.50%
Standard penalties for errors

Taxpayer Maximum Minimum Minimum
behaviour penalty penalty – penalty –
unprompted prompted
disclosure disclosure
Deliberate and concealed 100% 30% 50%
Deliberate but not concealed 70% 20% 35%
Careless 30% 0% 15%
5
Section A
This section of the exam contains 15 objective test (OT) questions.

Each question is worth 2 marks and is compulsory.
1 During the tax year 2022-23, Phil was paid a gross annual salary of £64,500. He also
received taxable benefits valued at £4,500.
What amount of Class 1 national insurance contributions will have been suffered
by Phil for the tax year 2022-23?
 £4,995
 £5,457
 £5,604
 £7,123
2 Moose Ltd registered for value added tax (VAT) with effect on 1 January 2023. The
company incurred the following expenditure prior to registration:
28 February 2022 Machine £1,000

31 March 2022 Stationery (unused at 1 January 2023) £150
1 June 2022 Advertising services £800
1 September 2022 Advertising services £500
These amounts are exclusive of VAT.
What amount of pre-registration input VAT will Moose Ltd be able to recover in
respect of the expenditure incurred prior to registering for VAT?
3 Shark Ltd is a wholly-owned subsidiary of Porpoise Ltd. Porpoise Ltd made a trading loss
of £120,000 for the year ended 31 March 2023.
In the same year Shark Ltd made a trading profit of £100,000, had chargeable gains of
£7,000 and paid qualifying charitable donations of £4,000.
Neither company has any other taxable profits or allowable losses.
What is the maximum amount of group relief which Shark Ltd can claim from
Porpoise Ltd in respect of the trading loss of £120,000 for the year ended 31
March 2023?
 £100,000
 £103,000
 £107,000
 £120,000
4 Angus and Bron have traded in partnership for several years, preparing accounts to 30
June each year. Colette was admitted to the partnership on 1 November 2022.
Indicate, by clicking on the correct line in the timeline below, the basis period for
Colette’s share of the partnership profits for the tax year 2022-23.
1 July 2021 30 June 2022 30 June 2023
1 November 2022 5 April 2023 31 October 2023
6
5 Edward sold a residential property on 31 March 2023 for proceeds of £250,000. The
property had cost Edward £80,000 when he purchased it in June 2006. The property was
not his private residence, and this was the only disposal that Edward made during the tax
year 2022-23.
Edward’s taxable income for the tax year 2022-23 was £35,000.
What is Edward’s capital gains tax liability for the tax year 2022-23?
 £31,270
 £44,156
 £31,540
 £43,886
6 During the tax year 2022-23, Arkady received bank interest of £18,795. This is his only
income for the year.
What amount of income tax is payable for the tax year 2022-23?
 £1,245
 £1,045
 £245
 £45
7 From 6 April 2022 Samuel was provided with living accommodation valued at £143,000.
His employer had purchased the property in 2014 for £89,000 and had carried out
improvements in 2015 that cost £10,000. The annual value of the property is £4,600.
What is Samuel’s taxable benefit in respect of the living accommodation provided

for the tax year 2022-23?
 £1,360
 £4,600
 £5,960
 £5,080
8 Shaun Ltd started trading on 1 January 2022 and prepared its first set of accounts to 31
March 2023.
Complete the following sentence by selecting the correct number of months of

and dates from the options below.
Shaun Ltd’s accounting periods for the period of account to 31 March 2023 will be
to and to .
Months Date
3 months 31 March 2022
12 months 31 December 2022
15 months 31 March 2023
7
9 Soft Ltd filed their corporation tax return for the year ended 31 December 2021 on 31 May
2023. This was the third consecutive time that Soft Ltd were late filing their corporation
tax return.
What late filing penalty will be levied on Soft Ltd for the late filing of the
corporation tax return for the year ended 31 December 2021?
 £100
 £1,000
 £200
 £500
10 On 18 September 2022 Gregory sold 25,000 £1 ordinary shares in Daub Ltd, an unquoted
trading company, for £240,000. The shares had been given to Gregory by his father,
Derek, on 10 June 2022 when the market value was £200,000. Derek had subscribed for
the shares at par on 1 July 2012. Derek and Gregory elected to holdover the gain as a gift
of a business asset. Gregory made no other capital disposals in the tax year 2022-23.
What is Gregory’s taxable gain in respect of the sale of the shares?
 £0
 £27,700
 £202,700
 £215,000
11 Quantum Ltd is in a group with two other related 51% group companies. For the year
ended 31 December 2022, Quantum Ltd had taxable total profits of £510,000, and for the
six months ended 30 June 2023 had taxable total profits of £270,000. The profits arose
evenly within this period.
Indicate, by clicking on the relevant boxes in the table below, the number of
instalments and amount of payments which Quantum Ltd must make to settle its
corporation tax liability for the period ended 30 June 2023.
Number of instalments One Two Three Four
Amount of payments £51,300 £25,650 £17,100 £12,825
12 Assuming Roman always utilises his annual exemption against other gifts, which
TWO of the following cash gifts made to his grandson, Stephen, during the tax
year 2022-23, will be exempt from inheritance tax?
£500 each month out of his income (2021-22: £450 a month)
£1,500 on Stephen’s 21st birthday
£2,000 on Stephen’s graduation from university
£2,500 on Stephen’s marriage to Bridget
8
13 On 29 October 2022, Jennifer made a cash gift to a trust of £650,000 (after deducting all
available exemptions).
Her only previous chargeable transfer was made in January 2017 and had a gross value
(after exemptions) of £125,000.
What amount of inheritance tax is payable in respect of Jennifer’s gift to the trust
on 29 October 2022?
 £81,250
 £90,000
 £112,500
 £162,500
14 Kew Ltd has the following trading results for the three years to 31 December 2023:
£
2021 Loss (37,600)
2022 Profit 19,500
2023 Profit 23,100
The trading loss of £37,600 is carried forward, and Kew Ltd has a policy of claiming losses
as soon as possible.
The company also has bank interest receivable of £3,200 in 2022 and £4,300 in 2023.
What is the amount of Kew Ltd’s taxable total profits for the year to 31 December
2023?
 £4,300
 £8,200
 £9,300
 £12,500
15 Ernest commenced trading on 1 January 2023. His turnover (all taxable supplies) for the
three months to 31 March 2023 was £47,200. Turnover (all taxable supplies) for the next
four months was as follows:
£
April 18,000
May 23,500
June 29,800
July 31,000
Identify, by clicking on the correct date on the timeline below, the date by which
Ernest must register for VAT.
1 June 2023 30 June 2023 30 July 2023 30 August 2023
9
Section B
This section of the exam contains three OT cases.

Each OT case contains a scenario which relates to five OT questions.
Each question is worth 2 marks and is compulsory
The following scenario relates to questions 16–20.
Progress Ltd sold the following assets during the year ended 31 March 2023:
(1) On 14 June 2022 part of its 2% shareholding in Essy plc was sold for £24,400. Progress
Ltd had originally purchased 15,000 £1 ordinary shares in Essy plc on 26 June 2001 for
£12,600. On 28 September 2013 Essy plc made a 1 for 3 rights issue. Progress Ltd took
up its allocation under the rights issue in full, paying £2.20 for each new share issued.
The indexation factor for the period June 2001 to September 2013 was 0.437.
(2) On 28 January 2023 a freehold factory was sold for £171,000. The indexed cost of the
factory on that date was £127,000. Progress Ltd has made a claim to holdover the gain on
the factory against the cost of a replacement freehold factory under the rollover relief
rules. The new factory was purchased on 10 December 2022 for £154,800. The two
factory buildings have always been used entirely for business purposes.
(3) On 20 February 2023 a hectare of land was sold for £130,000. Progress Ltd had originally
purchased four hectares of land, and the indexed cost of the four hectares on 20 February
2023 was £300,000. The market value of the unsold three hectares of land as at 20
February 2023 was £350,000. Progress Ltd incurred legal fees of £3,200 in connection
with the disposal. The land has never been used for business purposes.
10
16 What is the indexed cost of the Essy plc share pool in September 2013 after
taking up the rights issue?
17 If the shares in Essy plc sold by Progress Ltd had a cost of £18,880 and an
indexed cost of £25,336 what is the chargeable gain or loss arising?
Select… 
£800 gain
£936 loss
£0
£5,520 gain
18 What is the chargeable gain or loss in respect of the sale of the freehold factory?
 £16,200
 £0
 £27,800
 £44,000
19 Which TWO of the following statements are correct?
A rollover relief claim can only be made if reinvestment is between 12 months before
and three years after the date of the disposal of the old asset
A rollover relief claim can only be made if reinvestment is between three years
before and 12 months after the date of the disposal of the old asset
Rollover relief effectively reduces the gain arising on the disposal of the replacement
asset, as the base cost is reduced by the amount of the deferred gain.
A disposal in the tax year 2021-22 which is reinvested in a new assets in the tax year
2022-23 requires a claim by 5 April 2027.
20 What is the chargeable gain or loss in respect of the sale of land?
 £51,800
 £48,750
 £45,550
 £15,371
11
Ren has been a sole trader for many years, providing standard-rated services in the catering
business. The following information is available for the tax year 2022-23:
(1) Sales for the year were £120,000, exclusive of output value added tax (VAT).
(2) Expenses amounted to £50,000, exclusive of recoverable input VAT of £320.
Ren has been registered for VAT since he commenced trading. However, he has recently started
invoicing for his services on new payment terms, and is concerned about output VAT being
accounted for at the appropriate time.
Ren is not currently enrolled in the VAT flat rate scheme, but the scheme percentage applicable to
his business is 11%.
On 1 April 2023, Ren purchased a delivery van for £15,000 and paid £3,600 to lease a car. These
figures are inclusive of VAT. The delivery van is used 10% of the time for private purposes by an
employee and the leased car is used 20% of the time by Ren for private purposes.
12
21 Identify, by clicking on the relevant box in the table below, which of the following
statements is NOT correct regarding the tax point in respect of the supply of
services.
The basic tax point is the date when services are completed
The actual tax point will be earlier if the invoice date is earlier
The actual tax point will be the invoice date if it is within 14 days after the services are
provided
The date of payment is not relevant to the tax point
22 Which TWO of the following statements are correct?
Trade discount will reduce the tax value of a supply, but early settlement discount
will not
Both trade discount and early settlement discount will reduce the tax value of a
supply
Discounts taken up will require either a revised VAT invoice or a credit note to be
issued
Discounts taken up need not always require either a revised VAT invoice or a credit
note to be issued
23 Complete the following sentences by matching the correct descriptions of

turnover and time period into the relevant target area.
Ren can join the flat rate scheme if his expected turnover for the next 12
months does not exceed £150,000.
Ren would need to leave the flat rate scheme if, on the anniversary of joining, his
turnover exceeded £230,000 in the last .
Turnover Turnover Time period

VAT exclusive VAT exclusive 30 days
VAT inclusive VAT inclusive 12 months
24 What would be the tax saving if Ren had used the flat rate scheme throughout
the year ended 5 April 2023?
 £10,480
 £10,800
 £8,160
 £7,840
25 Assuming Ren does not join the flat rate accounting scheme, how much input tax
can he reclaim in respect of the delivery van and the leased car?
 £2,800
 £2,500
 £300
 £2,550
13
You should assume that today’s date is 31 March 2023.
Charles and Wilma were a married couple. Wilma died on 15 February 2014, and Charles died on 1
February 2023.
Wilma’s estate
Wilma left an estate valued at £300,000 for inheritance tax purposes. Under the terms of her will,
Wilma left a specific legacy of £50,000 to her sister, and the remainder of her estate to her
husband, Charles. Wilma had made only one lifetime gift of £100,000 to her daughter on 30 June
2011. The gift is after taking account of all available exemptions.
The nil rate band for the tax year 2013-14 is £325,000.
Charles’s estate
Charles has a chargeable estate of £700,000, which includes a private residence valued at
£400,000, which has a repayment mortgage of £130,000 remaining on it. Under the terms of his
will, Charles left his full estate to his daughter.
On 31 January 2015, Charles made a gift (a potentially exempt transfer) of 25,000 £1 ordinary
shares in Black Ltd, an unquoted investment company, to his daughter. Before the transfer, Charles
held 40,000 Black Ltd ordinary shares.
Black Ltd has an issued share capital of 50,000 £1 ordinary shares. On 31 January 2015, Black Ltd’s
shares were worth £3 each for a holding of 30%, £5 each for a holding of 50%, and £8 each for a
holding of 80%.
On 14 February 2022, Charles had made a gift of £25,000 to his granddaughter when she got
married.
Charles did not make any other lifetime gifts.
14
26 How much of Wilma’s nil rate band will the personal representatives of Charles
be able to claim when calculating the IHT payable on his chargeable estate?
27 What is the total amount of residence nil rate band which will be available in
calculating the IHT payable on Charles’s chargeable estate?
 £175,000
 £350,000
 £270,000
 £400,000
28 At the time of the gift, what was the amount of potentially exempt transfer which
Charles made to his daughter (the gift of 25,000 shares in Black Ltd) after
deducting any available exemptions?
Select… 
£269,000
£275,000
£125,000
£119,000
29 What is the value of the cash gift to Charles’s granddaughter, after all available
exemptions?
 £14,000
 £22,500
 £19,500
 £16,500
30 Which of the following statements are NOT true in relation to the residence nil
rate band?
 The residence nil rate band is not available if the residence is given to the child
during lifetime.
 The residence does not have to be the deceased’s residence at the time of death.
 The deceased must have lived in the property for a minimum of 9 months for it
to qualify.
 The residence nil rate band is not available when calculating the additional tax
due on lifetime gifts as a result of death.
15
Section C
This section of the exam contains three constructed response questions, each containing a
scenario which relates to one or more requirement(s).
Each constructed response question is worth 10 or 15 marks
All questions are compulsory.
31 You should assume that today’s date is 1 March 2023.
Alistor has been self-employed since 2011, preparing accounts to 5 April each year.
Alistor’s tax liabilities for the tax year 2021-22 were:
£
Income tax liability 11,432
Class 4 national insurance contributions 3,858
Class 2 national insurance contributions 159
Capital gains tax liability 5,000
For the tax year 2022-23, Alistor is expecting to have tax adjusted trading profits of
£65,000 and an expected chargeable gain of £32,300. This would result in the following
tax liabilities:
£
Income tax liability To be calculated
Class 4 national insurance contributions 4,343
Class 2 national insurance contributions 164
Capital gains tax liability 2,000
However, Alistor is considering some tax planning options that might reduce his tax
liabilities for the tax year 2022-23.
Tax planning options
Alistor is considering making a net personal pension contribution of £30,000 before the
end of the tax year 2022-23.
The chargeable gain of £32,300 is expected to arise from the sale of shares which will
qualify for business asset disposal relief for Alistor. He is considering transferring half of
the shares to his wife prior to disposal, so that she could dispose of them and make use of
her annual exempt amount which is available in full. However, the disposal will not qualify
for business asset disposal relief for his wife. Alistor’s wife will have taxable income of
£15,000 for the tax year 2022-23.
Required:
(a) Assuming that Alistor does not opt for any of the tax planning options,
calculate his income tax liability for the tax year 2022-23, and the total
payment that Alistor will be due to make by 31 January 2024, for the tax
years 2022-23 and 2023-24. (5 marks)
(b) Explain how tax relief will be given in the tax year 2022-23 if Alistor
makes the pension contribution. Calculate how much the pension
contribution would reduce the income tax payable by Alistor on 31
January 2024 in relation to the tax year 2022-23.
(3 marks)
(c) Advise Alistor of the overall capital gains tax saving for him and his wife
for the tax year 2022-23, if he transfers half of the shares to his wife
prior to disposal. (2 marks)
(10 marks)
16
32 Ariel and Nicholas have been in partnership for 10 years. The following information is
available for the tax year 2022-23:
Profit and loss account for the year ended 5 April 2023
The partnership’s statement of profit and loss for the year ended 5 April 2023 is as follows:
Note £ £
Sales 141,528
Expenses
Depreciation 2,728
Motor expenses 1 4,100
Other expenses 2 1,800
Wages and salaries 3 50,900
–––––– (59,528)
––––––
Net profit 82,000
––––––
(1) The figure of £4,100 for motor expenses includes £2,600 in respect of Nicholas’s
motor car, with 30% of this amount being in respect of private journeys.
(2) The figure of £1,800 for other expenses includes £720 for entertaining
employees. The remaining expenses are all allowable.
(3) The figure of £50,900 for wages and salaries includes the annual salary of £4,000
paid to Nicholas (see the profit sharing note below), and the annual salary of
£15,000 paid to Ariel’s husband, who works part-time for the partnership.
Another part-time employee doing the same job is paid a salary of £10,000 per
annum.
Plant and machinery
On 6 April 2022 the tax written down values of the partnership’s plant and machinery were
as follows:
£
Main pool 3,100
Motor car [1] 14,000
The following transactions took place during the year ended 5 April 2023:
Cost/(proceeds)
£
8 May 2022 Sold motor car [1] (13,100)
8 May 2022 Purchased motor car [2] 11,600
21 November 2022 Purchased motor car [3] 14,200
14 January 2023 Purchased motor car [4] 8,700
Motor car [1] has a CO2 emission rate of 105 grams per kilometre. It was used by
Nicholas, and 70% of the mileage was for business journeys. Motor car [2] purchased on
8 May 2022 is an electric car with zero CO2 emissions. It is used by Nicholas, and 70% of
the mileage is for business journeys.
Motor car [3] purchased on 21 November 2022 has a CO2 emission rate of 45 grams per
kilometre. Motor car [4] purchased on 14 January 2023 has a CO2 emission rate of 80
grams per kilometre. These two motor cars are used by employees of the business.
17
Profit sharing
Profits are shared 80% to Ariel and 20% to Nicholas. This is after paying an annual salary
of £4,000 to Nicholas, and interest at the rate of 5% on the partners’ capital account
balances. The capital account balances are:
£
Ariel 56,000
Nicholas 34,000
Required:
(a) Calculate the partnership’s tax adjusted trading profit for the year ended 5
April 2023, and the trading income assessments of Ariel and Nicholas for the
tax year 2022-23.
Note: Your computation should commence with the net profit figure of £82,000, and
should also list all of the items referred to in notes (1) to (3) indicating by the use of
1
zero (0) any items that do not require adjustment.
(12 marks)
(b) Calculate Ariel’s income tax and class 4 national insurance liability for the tax
year 2022-23.
(3 marks)
(15 marks)
1
A blank spreadsheet would be the most suitable layout for such a question in the exam.
18
33 Mice Ltd is a manufacturer of computer peripherals. The company prepares accounts to 31
March and its results for the year ended 31 March 2022 were as follows:
£
Trading profit 51,200
Property business income 12,200
Qualifying charitable donations 2,600
The following information is available in respect of the year ended 31 March 2023:
Trading loss
Mice Ltd made a trading loss of £180,000.
Property business income
Mice Ltd lets out three office buildings that are surplus to requirements.
The first office building is held leasehold and is let out furnished. Mice Ltd pays an annual
rent of £7,800 for this property, but did not pay a premium when the lease was acquired.
The property was let throughout the year ended 31 March 2023 at a quarterly rent of
£3,200, payable in advance. Mice Ltd paid business rates of £2,200 and insurance of £460
in respect of this property for the year ended 31 March 2023. During June 2022 Mice Ltd
repaired the existing car park for this property at a cost of £1,060, and then subsequently
enlarged the car park at a cost of £2,640.
The second office building is owned freehold. On 1 April 2022 the property was let to a
tenant, with Mice Ltd receiving a premium of £18,000 for the grant of an eight-year lease.
The company also received the annual rent of £6,000 which was payable in advance. Mice
Ltd paid insurance of £310 in respect of this property for the year ended 31 March 2023.
The third office building is also owned freehold. Mice Ltd purchased the freehold of this
building on 1 January 2023, and it will be empty until 31 March 2023. The building is to
be let from 1 April 2023 at a monthly rent of £640, and on 15 March 2023 Mice Ltd
received three months’ rent in advance. On 1 January 2023 Mice Ltd paid insurance of
£480 in respect of this property for the year ended 31 December 2023, and during
February 2023 spent £680 on advertising for tenants. Mice Ltd paid loan interest of
£1,800 in respect of the period 1 January 2023 to 31 March 2023 on a loan that was taken
out to purchase this property.
Loan interest received
On 1 July 2022 Mice Ltd made a loan for non-trading purposes. Loan interest of £6,400
was received on 31 December 2022, and £3,200 was accrued at 31 March 2022.
Dividend income
On 15 October 2022 Mice Ltd received a dividend of £7,400 from a 3% shareholding in

USB Ltd.
Chargeable gain
On 20 December 2022 Mice Ltd sold its 3% shareholding in USB Ltd. The disposal resulted
in a chargeable gain of £10,550, after taking account of indexation.
19
Required:
(a) Calculate Mice Ltd’s property business income for the year ended 31
March 2023. (8 marks)
(b) Assuming that Mice Ltd claims relief for its trading loss as early as
possible, calculate the company’s taxable total profits for the years
ended 31 March 2022 and 2023. Show the amount of losses unrelieved
at 31 March 2023, if any.
(5 marks)
(c) Mice Ltd has owned 100% of the ordinary share capital of Web-Cam Ltd since it
began trading on 1 April 2022. For the three-month period ended 30 June 2022
Web-Cam Ltd made a trading profit of £28,000, and is expected to make a
trading profit of £224,000 for the year ended 30 June 2023. Web-Cam Ltd has
no other taxable profits or allowable losses.
Required:
Assuming that Mice Ltd does not make any loss relief claim against its
own profits, advise Web-Cam Ltd as to the maximum amount of group
relief that can be claimed from Mice Ltd in respect of the trading loss of
£180,000 for the year ended 31 March 2023. (2 marks)
(15 marks)
End of Questions
20

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Taxation (UK)

Time allowed: 3 hours 15 minutes

This examination is divided into three sections:

All questions are compulsory

Tax rates and allowances are included on pages 2 - 5

Calculations and workings need only be made to the nearest £.

TAX RATES AND ALLOWANCES

Savings income nil rate band – Basic rate taxpayers £1,000

Days in UK Previously resident Not previously resident

Child benefit income tax charge

The relevant base level of CO2 emissions is 55 grams per kilometre.

51 grams to 54 grams per kilometre 15%

Car fuel benefit

Company van benefits

Individual savings accounts (ISAs)

The overall limit is £20,000.

Pension scheme limits

Annual allowance £40,000

Lifetime allowance £1,073,100

Authorised mileage allowances: cars

Up to 10,000 miles 45p

Plant and machinery

Annual investment allowance

Enhanced allowances for companies

Commercial structures and buildings

Cash basis of accounting

Revenue limit £150,000

Cap on income tax reliefs

Value added tax (VAT)

Inheritance tax: tax rates

Inheritance tax: taper relief

Capital gains tax

Lifetime limit – business asset disposal relief £1,000,000

National insurance contributions

Class 1 Employee £1 to £12,570 per year Nil

Class 1 Employer £1 to £9,100 per year Nil

Class 4 £1 to £12,570 per year Nil

Rates of interest (assumed)

Standard penalties for errors

This section of the exam contains 15 objective test (OT) questions.

28 February 2022 Machine £1,000

These amounts are exclusive of VAT.

Neither company has any other taxable profits or allowable losses.

1 July 2021 30 June 2022 30 June 2023

1 November 2022 5 April 2023 31 October 2023

What is Samuel’s taxable benefit in respect of the living accommodation provided

Complete the following sentence by selecting the correct number of months of

What is Gregory’s taxable gain in respect of the sale of the shares?

Number of instalments One Two Three Four

Amount of payments £51,300 £25,650 £17,100 £12,825

£500 each month out of his income (2021-22: £450 a month)

£1,500 on Stephen’s 21st birthday

£2,000 on Stephen’s graduation from university

£2,500 on Stephen’s marriage to Bridget

1 June 2023 30 June 2023 30 July 2023 30 August 2023

This section of the exam contains three OT cases.

The following scenario relates to questions 16–20.

19 Which TWO of the following statements are correct?