Advanced Taxation MCQ Quiz - Objective Question with Answer for Advanced Taxation - Download Free PDF
Last updated on Jun 24, 2025
Latest Advanced Taxation MCQ Objective Questions
Advanced Taxation Question 1:
Which of the following statements are true?
- A child does not receive their own personal allowance until they are 18 years old.
- Where income that a minor child receives is under £100 in the tax year, it is deemed to be the parent’s income and taxed on the parent.
Answer (Detailed Solution Below)
Advanced Taxation Question 1 Detailed Solution
The correct option is option 4
Additional information:
- Neither 1 or 2
- A child is entitled to the personal allowance from the year of birth.
- If the income that a child receives is from funds that were provided by the parent, and it exceeds £100 (gross) in a tax year, then the income is deemed to be the parent’s income and is taxed on the parent. Where the income is under £100 in the tax year, it is taxed on the child.
Advanced Taxation Question 2:
Miranda and Carl are a married couple. Miranda has trading income of £27,000 for the tax year 2024/25, and Carl has employment income of £10,000. Carl has made an election to transfer part of his personal allowance for the tax year 2024/25.
What is Miranda’s tax liability for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 2 Detailed Solution
The correct option is option 2
Additional Information:
| £ | |
| Trading income | 27,000 |
| Less: personal allowance | (12,570) |
| Taxable income | 14,430 |
| Tax at 20% | 2,886 |
| Less: personal allowance tax reduction (£1,260 × 20%) | (252) |
| Income tax liability | 2,634 |
Advanced Taxation Question 3:
Lakshya has employment income for the tax year 2024/25 of £138,000 from which £42,700 tax has been deducted through PAYE. He also has dividends of £15,000 for the tax year 2024/25.
What is Lakshya’s income tax payable for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 3 Detailed Solution
| £ | |
| Employment income | 138,000 |
| Dividends | 15,000 |
| Total income = net income | 153,000 |
| Less: personal allowance (>£125,140) | 0 |
| Taxable income | 153,000 |
| £ | % | |||
| other income | - basic rate | 37,700 | 20 | 7,540 |
| – higher rate | 87,440 | 40 | 34,976 | |
| - additional rate | 12,860 | 45 | 34,976 | |
| 138,000 | ||||
| Dividends – nil rate | 500 | 0 | 0 | |
| Dividends – additional rate | 14,500 | 39,35 | 5,706 | |
| Income tax liability | 153,000 | 54,009 | ||
| Less: PAYE | (42,700) | |||
| Income tax payable | 11,309 |
Advanced Taxation Question 4:
Max had trading income of £120,000 in the tax year 2024/25. He also made pension contributions of £3,200 (net).
What is Max’s taxable income for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 4 Detailed Solution
Additional Information:
| Trading income = total income = net income | 120,000 |
| Less: adjusted personal allowance (working) | (4,570) |
| Taxable income | 115,430 |
|
Working: |
| Personal allowance | £ | 12,570 |
| Net income | 120,000 | |
|
Less: gross pension contributions
(£3,200 × 100/80)
|
(4,000) | |
| Adjusted net income | 116,000 | |
| Less: income limit | (100,000) | |
| Personal allowance (50%) | (16,000) | |
| Adjusted Personal allowance | (8,000) | |
| 4,570 |
Advanced Taxation Question 5:
Prince purchased £200,000 (nominal value) gilts, paying interest at 1%, for £211,000 on 1 September 2023. Interest is payable half yearly on 30 June and 31 December.
He sold the gilts on 1 December 2024 for £213,000 (including accrued interest).
How much will Prince include in savings income in respect of the gilts in the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 5 Detailed Solution
The correct option is option 4
Additional Information:
| £ | |
| Interest received 30 June 2024 (£200,000 × 1% × 6/12) | 1,000 |
| Interest accrued (1 July 2024 – 30 November 2024) (£200,000 × 1% × 5/12) |
833 |
| Total interest income | 1,833 |
Gilt interest is taxed like other interest income on the receipts basis. However, under the accrued income scheme when gilts are sold, interest is effectively allocated to the vendor and purchaser on the accruals basis up to the date of sale.
Prince did not receive any interest on 31 December 2024 but will be taxed on £833 representing the interest accruing in the interest period for which he owned the gilts.
Top Advanced Taxation MCQ Objective Questions
Advanced Taxation Question 6:
Which of the following statements are true?
- A child does not receive their own personal allowance until they are 18 years old.
- Where income that a minor child receives is under £100 in the tax year, it is deemed to be the parent’s income and taxed on the parent.
Answer (Detailed Solution Below)
Advanced Taxation Question 6 Detailed Solution
The correct option is option 4
Additional information:
- Neither 1 or 2
- A child is entitled to the personal allowance from the year of birth.
- If the income that a child receives is from funds that were provided by the parent, and it exceeds £100 (gross) in a tax year, then the income is deemed to be the parent’s income and is taxed on the parent. Where the income is under £100 in the tax year, it is taxed on the child.
Advanced Taxation Question 7:
Miranda and Carl are a married couple. Miranda has trading income of £27,000 for the tax year 2024/25, and Carl has employment income of £10,000. Carl has made an election to transfer part of his personal allowance for the tax year 2024/25.
What is Miranda’s tax liability for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 7 Detailed Solution
The correct option is option 2
Additional Information:
| £ | |
| Trading income | 27,000 |
| Less: personal allowance | (12,570) |
| Taxable income | 14,430 |
| Tax at 20% | 2,886 |
| Less: personal allowance tax reduction (£1,260 × 20%) | (252) |
| Income tax liability | 2,634 |
Advanced Taxation Question 8:
Lakshya has employment income for the tax year 2024/25 of £138,000 from which £42,700 tax has been deducted through PAYE. He also has dividends of £15,000 for the tax year 2024/25.
What is Lakshya’s income tax payable for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 8 Detailed Solution
| £ | |
| Employment income | 138,000 |
| Dividends | 15,000 |
| Total income = net income | 153,000 |
| Less: personal allowance (>£125,140) | 0 |
| Taxable income | 153,000 |
| £ | % | |||
| other income | - basic rate | 37,700 | 20 | 7,540 |
| – higher rate | 87,440 | 40 | 34,976 | |
| - additional rate | 12,860 | 45 | 34,976 | |
| 138,000 | ||||
| Dividends – nil rate | 500 | 0 | 0 | |
| Dividends – additional rate | 14,500 | 39,35 | 5,706 | |
| Income tax liability | 153,000 | 54,009 | ||
| Less: PAYE | (42,700) | |||
| Income tax payable | 11,309 |
Advanced Taxation Question 9:
Max had trading income of £120,000 in the tax year 2024/25. He also made pension contributions of £3,200 (net).
What is Max’s taxable income for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 9 Detailed Solution
Additional Information:
| Trading income = total income = net income | 120,000 |
| Less: adjusted personal allowance (working) | (4,570) |
| Taxable income | 115,430 |
|
Working: |
| Personal allowance | £ | 12,570 |
| Net income | 120,000 | |
|
Less: gross pension contributions
(£3,200 × 100/80)
|
(4,000) | |
| Adjusted net income | 116,000 | |
| Less: income limit | (100,000) | |
| Personal allowance (50%) | (16,000) | |
| Adjusted Personal allowance | (8,000) | |
| 4,570 |
Advanced Taxation Question 10:
Prince purchased £200,000 (nominal value) gilts, paying interest at 1%, for £211,000 on 1 September 2023. Interest is payable half yearly on 30 June and 31 December.
He sold the gilts on 1 December 2024 for £213,000 (including accrued interest).
How much will Prince include in savings income in respect of the gilts in the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 10 Detailed Solution
The correct option is option 4
Additional Information:
| £ | |
| Interest received 30 June 2024 (£200,000 × 1% × 6/12) | 1,000 |
| Interest accrued (1 July 2024 – 30 November 2024) (£200,000 × 1% × 5/12) |
833 |
| Total interest income | 1,833 |
Gilt interest is taxed like other interest income on the receipts basis. However, under the accrued income scheme when gilts are sold, interest is effectively allocated to the vendor and purchaser on the accruals basis up to the date of sale.
Prince did not receive any interest on 31 December 2024 but will be taxed on £833 representing the interest accruing in the interest period for which he owned the gilts.
Advanced Taxation Question 11:
Isack’s only income in the tax year 2024/25 was dividend income of £56,950.
What is Isack’s income tax liability for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 11 Detailed Solution
The correct option is option 3
Addiitonal Information:
| £ | |
| Dividends | 56,950 |
| Less: PA | (12,570) |
| Taxable income | 44,380 |
| Income tax liability: | £ |
| Dividend income – nil rate band (£500 × 0%) | 0 |
| Dividend income – basic rate (£37,200 × 8.75%) | 3,255 |
| Dividend income – higher rate (£6,680 × 33.75%) | 2,255 |
| Income tax liability | 5,510 |
Advanced Taxation Question 12:
Ryan received the following income for the tax year 2024/25:
| £ | |
| Property income | 21,150 |
| Interest from UK Government securities (gilts) | 2,400 |
| Dividends | 450 |
What is Ryan’s total income tax liability for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 12 Detailed Solution
The correct option is option 1
Additional Information:
| £ | |
| Property income | 21,150 |
| Interest from UK Government securities (Gilts) | 2,400 |
| Dividends | 450 |
| Net income | 24,000 |
| Less: Personal allowance | (12,570) |
| Taxable income | 11,430 |
Analysis of income:
Non‐savings income = £8,580 (£21,150 – £12,570), savings income = £2,400, dividend income = £450.
| £ | ||
| 8,580 | × 20% (Non‐savings income) | 1,716 |
| 1,000 | × 0% (SNRB) | 0 |
| 1,400 | × 20% (Savings income) | 280 |
| 450 | × 0% (DNRB) | 0 |
| 11,430 | ||
| Income tax liability | 1,996 |
Advanced Taxation Question 13:
Merik is a sole trader. During the tax year 2024/25 he had taxable trading income of £106,800 and received dividend income of £1,500. Merik made a gift aid donation of £2,000 (gross) during the tax year 2024/25.
What amount of personal allowance is Merik entitled to for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 13 Detailed Solution
The correct option is option 3
Additional Information:
| £ | |
| Trading income | 106,800 |
| Dividend | 1,500 |
| Net income | 108,300 |
| £ | £ | |
| PA | 12,570 | |
| Net income | 108,300 | |
| Less: Gross gift aid | (2,000) | |
| Adjusted net income | 106,300 | |
| Less: Income limit | (100,000) | |
| 6,300 | ||
| Reduction of PA (50% × £6,300) | (3,150) | |
| Adjusted PA | 9,420 |
Advanced Taxation Question 14:
Ira and Tim are a married couple. In the tax year 2024/25 Ira had a salary of £5,000 and Tim had property income of £40,650. They have made an election to transfer the fixed amount of personal allowance from Ira to Tim.
What is Tim’s income tax liability for the tax year 2024/25?
Answer (Detailed Solution Below)
Advanced Taxation Question 14 Detailed Solution
The correct option is option 3
Additional Information:
| Non‐savings income | ||
| £ | ||
| Rental income = net income | 40,650 | |
| Less: PA | (12,570) | |
| Taxable income | 28,080 | |
| Income tax liability: | £ | |
| Non‐savings income – basic rate | 28,080 × 20% | 5,616 |
| Less: Marriage allowance | 1,260 × 20% | (252) |
| Income tax liability | 5,364 |