Taxation June 2025 Pre Mock
Section A
1. Brownee Ltd owns 95% of the ordinary share capital of Cookee Ltd and 100%
of the ordinary share capital of Bicci Ltd. Cookee Ltd owns 75% of the
ordinary share capital of Dohnut Ltd. Bicci Ltd owns 58% of the ordinary
share capital of Wayfer Ltd. Which companies are within Brownee Ltd's
chargeable gains group?
❑ Bicci Ltd, Cookee Ltd and Dohnut Ltd
❑ Bicci Ltd, Cookee Ltd, Dohnut Ltd and Wayfer Ltd
❑ Bicci Ltd and Cookee Ltd
❑ Bicci Ltd, Dohnut Ltd and Wayfer Ltd
2. Drake started a new sole-trade business. He then received a notice from HM
Revenue and Customs (HMRC) to submit his self-assessment tax return for
the first tax year. He did not submit the return by the due date and still has
not submitted it.
Indicate, by clicking on the relevant boxes in the table below, which of the
following actions HMRC can take in order to collect any tax owing in respect of
Drake's unfiled return:
TRUE
FALSE
Start a compliance check enquiry into the return
Make a determination
Offer an internal review
Raise a discovery assessment
3. Tomas has been running his sole trade business for many years.
He had an income tax and Class 4 NIC liability for the tax year 2023-24 of £23,400.
Tomas believed that his trade would experience a slump in tax year 2024-25, so
made a claim to reduce his second payment on account for 2024-25 to £10,000. He
made this reduced payment on 31 July 2025. Tomas’s income tax and Class 4 NIC
liability for the tax year 2024-25 actually ended up being £14,300. Any balance
remaining due was paid on 31 January 2026.
How much interest will Tomas owe HMRC in connection with the second payment
on account for tax year 2024-25?
4. Magill Motors Ltd has made the following purchases and disposals of shares
in Princetown Pilons plc over the years:
Transaction
type
Transaction
date
Number of
shares
Total cost of
proceeds (£)
Purchase
1 June 2002
40,000
55,000
Disposal
17 September
2024
12,000
97,000
The relevant indexation factors is: June 2002 – December 2017
0.578
What is the indexed cost that should be deducted in calculating the chargeable gain
on the sale of the shares on 17 September 2024?
❑ £31,790
❑ £86,790
❑ £26,037
❑ £16,500
5. Brandie sold an antique vase in October 2024 for net proceeds of £7,800, after
deducting selling costs of £1,700. She had originally purchased the vase in
June 2015 for £5,350.
What is Brandie’s capital gain arising on the sale of the antique vase?
❑ £5,833
❑ £4,150
❑ £3,000
❑ £2,450
6. Garett made a VAT inclusive standard-rated supply on 1 December 2024 for a
consideration of £2,850.
Select the correct values for this supply.
The VAT element is 1
❑ £475
❑ £570
❑ £683
❑ £570
The value of the supply is 2
❑ £2,375
❑ £2,850
❑ £3,420
❑ £2,850
7. Which of the following statements about tax returns is INCORRECT?
❑ The tax return comprises a main return form, together with supplementary
pages for particular sources of income
❑ A partnership must file a separate return, and account for each partner’s tax
on this return
❑ If HM Revenue and Customs (HMRC) calculates the tax for the taxpayer, it
merely does so based on the information provided and does not judge the
accuracy of it
❑ An employee who only has employment income, with the tax collected under
PAYE, is not required to complete a tax return
8. For the year ended 31 March 2025, Earlytime Ltd has taxable total profits of
£220,000. The company also received dividends of £13,000 from non-associated
companies during the year. What is Earlytime Ltd’s corporation tax liability
for the year ended 31 March 2025?
9. Hansel and Gretel arrived in the United Kingdom (UK) during tax year 202425. Neither had previously been resident in the UK and neither of them
worked in the UK during tax year 2024-25. In July 2024 they each acquired
separate homes in the UK. Neither of them has any other home. In the tax
year 2024-25, Gretel spent 39 days in the UK and Hansel spent 66 days in the
UK. Which of them is/are resident in the UK for the tax year 2024-25?
❑ Both Hansel and Gretel
❑ Gretel only
❑ Hansel only
❑ Neither Hansel nor Gretel
10. DFB Ltd decided to change its accounting date and so had a 15-month period
ended 31 March 2025.
By which date(s) must DFB Ltd file its corporation tax self-assessment tax return(s)
for the 15-month period ended 31 March 2025?
❑ The return for the year ended 31 December 2024 must be filed by 31 October
2025. The return for the period ended 31 March 2025 must be filed by 31
December 2025.
❑ One return for the 15-month period ended 31 March 2025 must be filed by 31
March 2026.
❑ The return for the year ended 31 December 2024 must be filed by 31 December
2025. The return for the period ended 31 March 2025 must be filed by 31
March 2026.
❑ The returns for the year ended 31 December 2024 and the period ended 31
March 2025 must both be filed by 31 March 2026.
11. Linus died on 5 November 2024, having made a lifetime cash gift of £600,000 to
a trust on 16 October 2023. Linus paid the inheritance tax arising from this
gift.
Select the correct options.
❑ Linus
❑ The trustees
❑ The personal representatives
_____ will be responsible for paying the additional IHT arising from the gift made to
the trust as a result of Linus' death. This additional tax will be due on ____ 2
❑ 5 April 2025
❑ 5 May 2025
❑ 31 May 2025
❑ 5 November 2025
12. Mousehouse Ltd is a UK company that incorporated on 1 December 2024.
The company started to trade on 1 February 2025 and made up its first
accounts for the period to 31 August 2025.
By which date must Mousehouse Ltd notify HM Revenue and Customs
(HMRC) of its first accounting period?
❑ 1 February 2025
❑ 1 March 2025
❑ 1 May 2025
❑ 31 August 2026
13. Blaire has lived in job-related accommodation provided by her employer for
many years. She was provided with this accommodation for her own personal
security due to the nature of the job. Blaire has an annual gross salary of
£50,000 for the tax year 2024-25. Her employer always pays for heating,
cleaning and lighting for the accommodation as well which has a total annual
cost of £7,000. Her employer also provided Blaire with furniture on 6 April
2024 at a cost to the employer of £10,000.
What is the total amount assessable to income tax for Blaire in the tax year 2024-25
in relation to the furniture, heating, cleaning and lighting costs?
❑ £5,000
❑ £17,000
❑ £7,000
❑ £15,000
14. Farinah commenced her sole-trade business on 1 June 2024 and registered for
value added tax (VAT) from 1 October 2024. The first VAT return for her
business is for the quarter ended 31 December 2024. During the period 1 June
2024 to 31 December 2024, the business incurred input VAT of £110 per month
in respect of the hire of office equipment.
How much input VAT in respect of the office equipment can Farinah reclaim on
the business’ VAT return for the quarter ended 31 December 2024?
❑ £0
❑ £330
❑ £660
❑ £770
15. Bass Boomers Ltd commenced trading on 1 January 2023. It has always had
one associated company. The company’s augmented profits have been as
follows:
Year ended 31 December 2023
£452,000
Year ended 31 December
2024
£933,000
Year ended 31 December
2025
£1,012,000
What is the first year for which Bass Boomers Ltd will be required to pay its
corporation tax liability by quarterly instalments?
❑ Year ended 31 December 2023
❑ Year ended 31 December 2024
❑ Year ended 31 December 2025
❑ None of the years ended 31 December 2023, 2024 or 2025
Section B
This scenario is relevant to questions 16 to 20:
Morven owns a sole trade business making candles (a standard-rated supply for
VAT). Her VAT-exclusive total turnover for the year ended 31 March 2025 was
£106,200.
The input and output VAT for the business for the most recent two years is as follows:
Period
Input VAT
Output VAT
Year ended 31 March 2024
£9,500
£17,200
Year ended 31 March 2025
£11,622
£21,240
Morven has never used any of the special VAT schemes but is considering registering
for either the annual accounting scheme or the flat rate scheme. If she uses the flat
rate scheme her business would have a percentage of 11%.
Morven was late submitting the VAT returns and making the VAT payment for the
VAT quarters ending 30 June 2024, 30 September 2024 and 31 December 2024 with
her most recent VAT return and payment for the period ending 31 March 2025
being made seven days late.
Morven issues VAT invoices for some of her supplies.
16. Which of the following statements is an advantage of being in the annual
accounting scheme?
❑ Once in the scheme there is never a requirement to leave the scheme
❑ There will be fewer occasions when penalties could be triggered
❑ There is no requirement to submit a VAT return
❑ The taxpayer can choose any number of instalment payments they wish
17. If Morven had decided to join the annual accounting scheme for the year
ended 31 March 2024 what would each of her monthly payments on account
have been?
❑ £642
❑ £770
❑ £856
❑ £962
18. If Morven had registered for the flat rate scheme for the VAT year ended 31
March 2025, what would her VAT liability have been?
❑ £11,682
❑ £2,396
❑ £60
❑ £14,018
19. Which of the following statements about the implications of the late VAT
return submission and payment for the quarter ended 31 March 2025 is true?
❑ A penalty of £800 will be payable
❑ A late filing penalty and late payment penalty will arise
❑ Any further late returns filed will incur a £200 penalty unless 12 month has
passed without a late return
❑ A 2% late payment penalty is due
20. Which TWO of the following statements about Morven’s issuing of VAT
invoices are true?
❑ Morven has to include the name and address of the customer on a detailed
invoice
❑ Morven can issue a less detailed invoice for a supply totalling £250 before
VAT
❑ Morven does not have to issue a VAT invoice to a customer who is not a
taxable person
❑ Morven can issue an electronic VAT invoice even if the customer does not
agree
This scenario is relevant to questions 21 to 25:
Adam died on 15 January 2025 and he had the following assets and liabilities at the
time of his death:
Asset/liability
Valuation (£)
Property
286,000 (note 1)
Shares
122,000
Credit card debt
Legal fees
3,750
700 (note 2)
Note 1: There was an outstanding interest only mortgage of £50,000 on this property
Note 2: There had been a verbal agreement to pay this off for his daughter
Under the terms of his will, Adam left his estate to his girlfriend (they had never
married).
During his lifetime, on 18 December 2024, Adam made a gift of £46,000 to his brother.
This figure is after deducting all available exemptions.
21. What is the net value for the property which would have been included in the
calculation of Adam’s chargeable estate?
❑ £236,000
❑ £286,000
❑ £336,000
❑ £0
22. Which of the following items from Adam’s estate can be deducted in the
calculation of the death estate for IHT purposes?
❑ Credit card debt
❑ Promise to pay off daughter's legal fees
❑ Shares
❑ None of the above
23. Which TWO of the following statements about Adam’s death estate are TRUE?
❑ None of his death estate will be taxable as it falls under the spousal
exemption rules
❑ The property will be partially covered by the residence nil rate band
❑ The death estate will not attract taper relief to reduce the IHT liability
❑ The IHT liability on the death estate will be calculated at a rate of 40%
24. By how much would the IHT liability on Adam’s death estate be reduced, had
he died in January 2032 instead of January 2025?
❑ £18,400
❑ £46,000
❑ £0
❑ £9,200
25. By what date should any inheritance tax due on Adam’s death estate be paid?
❑ 14 July 2025
❑ 31 July 2026
❑ 31 July 2025
❑ 30 April 2025
This scenario is relevant to questions 26 to 30:
Disposal of shares in Big Boots Ltd:
Angel gifted 25,000 £1 ordinary shares in Big Boots Ltd, an unquoted trading
company, to her daughter, Bernice, on 12 February 2025 when their market value
was £10 each.
Angel had subscribed for the 25,000 shares in Big Boots Ltd at par value on 1 August
2010.
Angel and Bernice have made a joint election for gift holdover relief to defer the gain
on the gift of shares.
On 8 March 2025 Bernice then sold the 25,000 shares in Big Boots Ltd for £250,000 to
an unconnected party.
Big Boots Ltd:
Big Boots Ltd has a share capital of 100,000 £1 ordinary shares. Angel was the sales
director of the company from its incorporation on 1 August 2010 until 12 February
2025. Bernice has never been an employee or a director of Big Boots Ltd.
Residential property:
Bernice disposed of a residential property on 31 March 2025 for a gain of £380,000.
She legally owned this property herself and had rented it out during her entire
period of ownership. Bernice’s husband Cammy has no taxable income and has not
disposed of any assets in the tax year 2024-25.
Other information:
For the tax year 2024-25, Angel and Bernice are both higher rate taxpayers. They
have each made other disposals of assets during the tax year 2024-25, and therefore
they have both already utilised their annual exempt amount for that tax year.
26. By what date does the claim for the gift holdover relief for the gift of the
shares on 12 February 2025 need to be made?
❑ 31 January 2026
❑ 31 January 2030
❑ 5 April 2029
❑ 5 April 2026
27. What is Bernice’s CGT liability on the disposal of the shares in Big Boots Ltd
on 8 March 2025?
28. If Angel herself had actually sold the shares in Big Boots Ltd to a third party
and then gifted the cash proceeds to Bernice, which of the following
statements would have been true?
❑ Business asset disposal relief would have been available on the sale of the
shares
❑ The CGT liability would have been paid later than when gifting the shares to
Bernice
❑ The cash gift would have been a chargeable disposal
❑ The cash gift would have qualified for gift relief
29. Which of the following statements about the disposal of the residential
property by Bernice on 31 March 2025 is true?
❑ If she had delayed the disposal of the property until May 2025 it would have
saved tax
❑ The purchaser would need to pay the CGT due within 10 days of the disposal
of the property
❑ Cammy could have transferred his unused annual exempt amount to Bernice
❑ The disposal of the property is subject to CGT at 20%
30. How much capital gains tax would have been saved if Bernice had
transferred 50% of the ownership of the residential property to Cammy prior
to its disposal?
❑ £2,802
❑ £3,000
❑ £720
❑ £2,982
Section C
This scenario relates to two requirements
Tina currently runs a sole-trade business developing beauty products at home. She
expects her total income tax liability and national insurance contributions for the
tax year 2024-25 to be £9,732 on this basis. She would be a basic rate taxpayer for that
tax year as a sole trader.
Tina has been considering incorporating her business and would like to compare the
potential tax liability of that to her sole trade business.
The forecast trading profits of the new limited company would be £50,000 (before
taking account of any director’s remuneration or associated costs). Tina would be
planning to pay herself gross director’s remuneration of £30,000 and dividends of
£10,000. The balance of profits would be retained within the new company. The new
company would not qualify for the NIC annual employment allowance.
Whichever structure is used, Tina would like to start contributing £10,000 into a
pension scheme and would like some advice on the tax implications of doing so. She
is not sure yet whether to invest into a personal pension scheme or an occupational
scheme.
(a) Calculate whether there would be an overall saving of tax (income tax,
corporation tax, employee and employer national insurance contributions) if Tina
were to set up a new limited company compared with her current sole trade
business.
(7 marks)
(b) Explain the tax relief that Tina could get on a pension contribution of £10,000
per annum and whether her choice of scheme would impact this.
(3 marks)
(10 marks)
This scenario relates to three requirements
Bharat works as a full-time employee for Koffee Kabin, a mobile coffee cart business
supplying local events and businesses with hot drinks and cakes.
Bharat receives the following income and benefits for the tax year 2024-25:
(i)
A gross monthly salary of £1,500. He is paid this on the 28th day of each month.
(ii)
A bonus of £400 paid to Bharat on 25 April 2025 for work he did in the year to
31 December 2024. He became entitled to the bonus on 20 January 2025.
(iii) Use of a bicycle to get to and from work from 1 May 2024 until 31 October 2024.
The annual value of this benefit was £250.
(iv)
Barista training in London at a cost of £799 to Koffee Kabin.
(v)
Employer contributions of 6% of Bharat’s salary made into the business’
registered occupational pension scheme.
(vi)
Private medical insurance costing £1,420.
(vii) Personal use of a new laptop from 6 July 2024 which cost Koffee Kabin £1,000.
On 6 March 2025, Koffee Kabin transferred ownership of this laptop to Bharat for £20
at which time it was worth £800.
Bharat paid the following amounts during the tax year 2024-25:
(i)
4% of his salary into the employer’s occupational pension scheme.
(ii)
£750 donation to charity via Koffee Kabin’s approved payroll giving scheme.
(iii) £25 on train tickets to an employee appreciation day. This was fully reimbursed
by Koffee Kabin.
The Koffee Kabin is exploring the idea of using contractors to run the coffee carts
rather than employees. Bharat is worried about how being treated as self-employed
rather than an employee might affect him and would like some explanation of how
HMRC might make a decision on this.
(a) Calculate Bharat’s employment income assessment for the tax year 2024-25.
Note: You should use 0 (zero) to indicate any items which are not
deductible/taxable.
(8 marks)
(b) Calculate the total national insurance contributions payable in respect of
Bharat’s employment income for the tax year 2024-25.
(4 marks)
(c) Explain how HMRC may make an assessment of whether Bharat is self-employed
or employed by Koffee Kabin in the future.
(3 marks)
(15 marks)
This scenario relates to three requirements
Paradise Parties Ltd (“PP”), a party accessory company, ceased trading on 31
December 2024, having traded profitably for many years. The company has always
previously had an accounting reference date of 31 March until its final period of
trading.
A summary of PP’s statement of profit or loss for the nine-month period to 31
December 2024 is shown below:
Note
Sales
£
156,410
Property business income
1
11,800
Profit on sale of freehold office building
2
94,700
Less: Depreciation
(15,360)
Salaries and staff costs
3
(183,100)
Vehicle leasing
4
(1,500)
Other expenses
5
(199,711)
Loss
(136,761)
Notes:
1.
The property business income is in respect of a freehold office building that
had always been rented out.
During the last 12 months of PP’s trade the property income and expenses
included:
• 1 February 2024:
o received rent of £15,000 for the 6 months to 30 June 2024
o paid insurance of £2,800 for the 12 months to 31 December 2024
• 1 August 2024:
o received rent of £18,000 for the 6 months to 31 December 2024
o paid for repairs following a roof leak (uninsured) costing £3,200
2.
The freehold office building was sold on 31 December 2024 for proceeds of
£179,500. The office had originally cost £52,000. Indexation allowance for the
relevant time period to December 2017 is £15,680.
3.
The salaries and staff costs figure includes:
•
•
an amount of £10,590 for bonuses that have been declared but won’t be paid
until early 2026 and
an amount of £2,100 on counselling services provided to employees who were
made redundant
4.
The vehicle leasing is made up of £500 in respect of a car with CO2 emissions of
32g/km and £1,000 in respect of a van with CO2 emissions of 145g/km.
5.
Other expenses includes the following items:
•
•
•
6.
Entertainment of UK suppliers
Entertainment of overseas customers
Qualifying charitable donations
£3,425
£520
£800
The tax written down value of PP’s main pool on 1 April 2024 was £36,200. All
items in the pool were disposed of for £12,215 on 31 December 2024, each of
them at a loss compared with the original purchase price.
(a) Calculate the tax-adjusted trading loss for Paradise Parties Ltd for the 9-month
period ending 31 December 2024.
(6 marks)
(b) Assuming that Paradise Parties Ltd claims the maximum amount of loss relief in
the 9-month period ending 31 December 2024, calculate the taxable total profits or
loss for that period.
(7 marks)
(c) Outline the ways that Paradise Parties Ltd could use any trading loss left
outstanding at 31 December 2024.
(2 marks)
(15 marks)
Answer keys:
Section A
1. Bicci Ltd, Cookee Ltd, Dohnut Ltd
For chargeable gains groups, the 75% test needs to be met at each level as well as
there being more than 50% holding indirectly. Brownee Ltd is the parent company
so we check the relationships it has with its subsidiaries. Bicci Ltd and Cookee Ltd
are included as there is at least a 75% relationship directly from each of them with
Brownee Ltd. Dohnut Ltd is included because Brownee Ltd has 95% x 75% = 71% so
over 50% indirectly of Dohnut Ltd via Cookee Ltd which is sufficient. Plus there is
also at least a 75% relationship between Cookee Ltd and Dohnut Ltd. Wayfer Ltd fails
the “at least 75% relationship at each level” test so is not in the group.
2.
Start a compliance check enquiry into the return
FALSE
Make a determination
TRUE
Offer an internal review
FALSE
Raise a discovery assessment
FALSE
To actually collect tax a determination must be made. The other options would
require some kind of return to have been submitted which it wasn’t in this case.
3. £0
Since his prior year tax liability was £23,400 Tomas was required to make two
payments on account of £11,700 for the following tax year, 2024-25. The first being
due 31 January 2025 and the second on 31 July 2025. He reduced the second payment
to £10,000 but could have reduced it further based on a much lower final tax liability
than expected. Therefore, Tomas does not owe HMRC any interest on underpaid tax.
4. £26,037
Purchase 1 June 2002
Number
Cost (£)
Indexed cost
(£)
40,000
55,000
55,000
Indexation prior to part disposal
0.578 x 55,000
Disposal 17 September 2024
Balance remaining
31,790
40,000
55,000
86,790
(12,000)
(16,500)
(26,037)
28,000
38,500
60,753
Option 1 is the total indexation on all of the shares
Option 2 is the total indexed cost on all of the shares
Option 4 is the cost of the shares sold
5. £2,450
As the gross proceeds are over £6,000 the gain is restricted to the lower of:
•
5/3 x (GP-£6K) = 5/3 x (£9,500 - £6,000) = £5,833
•
£7,800 - £5,350 = £2,450
Option 1 higher gain with marginall relief
Option 2 used gross profits less cost
Option 3 used net proceeds rather than gross proceeds to restrict the gain
6. £475 and £2,375
VAT element is £2,850 x ⅙ and value of supply is £2,850 x ⅚
Other answers:
£570 – treated £2,850 as being VAT exclusive
£683 – applied 20% to £3,420
£2,850 – didn’t take 5/6 of the consideration
£3,420 – added 20% to the consideration
7. A partnership must file a separate return, and account for each partner’s tax
on this return
The partnership files a return showing the profits of the partnership and the split of
these profits between the partners. Each partner then completes their own tax
return with only their share on it. The partnership itself does not pay tax and the
partnership is not responsible for the individual’s tax.
The other options are all true statements.
8. £ 54759
TTP
£220,000
Plus dividends from non-associated companies
£13,000
Augmented profits
£233,000
Tax TTP at 25%
£55,000
Less marginal relief:
(250,000 – 233,000) x 3/200 x (220,000/233,000)
(£241)
£54,759
9. Hansel only
Gretel meets the automatic overseas test even though she has a UK home and no
overseas home, because she spent only 39 days in the UK.
Hansel doesn't meet any of the automatic overseas tests but is automatically UK
resident due to the home test.
10. The returns for the year ended 31 December 2024 and the period ended 31
March 2025 must both be filed by 31 March 2026
Two returns are required but both have the same filing date
11. The trustees, 31 May 2025
Payments are always due at the end of a month. The gift was to a trust during the
donor’s lifetime, so it does not form part of the death estate.
12. 1 May 2025
Needs to notify within 3 months of start of trade.
13. £5,000
As the accommodation is job-related there is no charge on the accommodation itself
but there will be for any ancillary costs paid by the employer (up to a maximum of
10% of net remuneration) so 10% of £50,000 is the maximum.
Option 2 treated accommodation as not exempt and included heating etc at full cost
Option 3 treated heating etc as not capped at 10% of net remuneration
Option 4 correctly capped heating etc but didn’t treat accommodation as exempt
14. £770
3 months from 1 October to 31 December at £110 = £330 plus up to 6m of preregistration input VAT for services so an additional 4m @ £110 = £440
Option 1, since the business has registered for VAT, it can claim input VAT back
Option 2 missed the pre-registration VAT
Option 3 confused the 6m pre-registration rule to claim a max of 6m worth here
15. Year ended 31 December 2025
The threshold for large company instalments is divided by two as there is an
associate. Although that limit of £750,000 was exceeded in the second year, 12 months
to 31 December 2024, one of the exceptions to the instalment rules applies in that it
was not a large company in the previous year and its augmented profits were less
than £10 million.
Section B
16. There will be fewer occasions when penalties could be triggered
Explanation:
There is a limit beyond which a taxpayer must leave the scheme, the taxpayer
normally makes 9 instalments but can request for three, and one VAT return a year
is required.
17. £770
£17,200-£9,500=£7,700 x 10%
Option 1 £642: divided by 12 months
Option 3 £856: divided by 9 monthly instalments
Option 4 £962: used 2025 figures
18. £14,018
By registering for the flat rate scheme, her VAT liability would be 11% x (£106,200 +
£21,240) = £14,018.
Option 1 Applied flat rate % to VAT exclusive turnover
Option 2 Deducted input VAT
Option 3 Applied flat rate % to VAT exclusive turnover and deducted input VAT
19. Any further late returns will incur a £200 penalty unless 12 months has passed
without a late return.
20.
• Morven has to include the name and address of the customer on a detailed invoice
• Morven does not have to issue a VAT invoice to a customer who is not a taxable
person
Option 2 Less detailed invoices are applicable for standard rate supplies up to £250
including VAT
Option 4 electronic invoices can only be issued with the agreement of the customer
21. £236,000
Interest only mortgages can be deducted to arrive at the net value for the property
£286,000 - £50,000 = £236,000
Option 2 didn’t deduct the outstanding mortgage
Option 3 Added the outstanding mortgage instead of deducting it
Option 4 Treated it as exempt
22. Credit card debt
The credit card debt is deductible
Other options:
The verbal agreement is not deductible and the shares need to be taxed
23.
• The death estate will not attract taper relief to reduce the IHT liability
• The IHT liability on the death estate will be calculated at a rate of 40%
As the couple were not married or civil partners, the spousal exemption does not
apply. The residence nil rate band does not apply as the property was not left to a
direct descendant.
24. £18,400
The gift to the brother would no longer be a failed PET and so £46,000 x 40% = £18,400
less IHT would be payable
Option 2 The amount of the transfer has been used rather than the tax saving
Option 3 No tax saving achieved
Option 4 20% tax rate used
25. 31 July 2025
6 months after the end of the month of death
Option 1 - 6 months after date of death
Option 2 - 12 months after end of month of death
Option 4 - 30 April that falls after the date of death
26. 5 April 2029
The claim must be made within 4 years of the end of the tax year in which the gift
was made, ie for a disposal in 2024-25 it would be 4 years from 5 April 2025.
Option 1 31 January after end of tax year of gift
Option 2 31 January 4 years after end of tax year of gift
Option 4 12 months from the end of the tax year of gift
27. £ 45000
£250,000 proceeds less cost to Angel £25,000 = £225,000 @ 20% = £45,000 since she is a
higher rate taxpayer
28. Business asset disposal relief would have been available on the sale of the
shares
Business asset disposal relief would have been available as Angel was a director
employed at Big Boots Ltd for at least 12 months leading up to the disposal.
29. If she had delayed the disposal of the property until May 2025 it would have
saved tax
Delaying until May 2025 would allow her to use an AEA for 2025-26 as she had already
used hers for 2024-25.
Option 2 - CGT on residential properties is due within 60 days of the disposal.
Option 3 - Unused AEAs cannot be transferred
Option 4 - Tax on residential properties is always at 18 or 24%.
30. £2.982
Bernice would pay CGT at 24% on the full amount of the disposal. They would
therefore save £3,000 @ 24% = £720 (being the AEA that Cammy could utilise) and
£37,700 @ (24%-18%) = £2,262 (being the difference between Bernice’s marginal rate of
CGT and Cammy’s marginal rate, being a BR taxpayer)
Option 1 - 18% used instead of 24% for AEA saving
Option 2 - AEA amount rather than tax saving
Option 3 - Missed difference between Bernice and Cammy’s marginal tax rates (i.e.
just AEA saving)
Section C