©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
SQE1 – Tax Exam Questions With Verified
Answers
Tax return must be filed by 31 Jan after the tax year. For example, tax year 2025/26, return must
be filed by 31 Jan 2027. Paper return must be filed 3 months earlier, i.e. 31 Oct 2026 -
Answers✔NA
First payment is due on 31 Jan in the tax year in question. Second payment is due on 31 July
after the end of tax year. Any balance is due by 31 Jan after the end of tax year - same deadline
for filing and paying the first installment for current tax year.
In the first year of trade, no payments are required.
Since trading started during tax year 2020/21, the man would have had to pay any tax owed on
his trade income by 31 January 2022 and submit an online tax return by that same date. -
Answers✔NA
Payments on account are calculated using 50% of the prior year's income tax payable figure. -
Answers✔NA
Penalty: careless mistake: up to 30% of tax potentially lost by HMRC.
(For example, difference between declared & true amount, multiply by 20% if basic rate
taxpayer, then multiple 30% for max penalty)
Up to 100% if repeat & deliberate
HMRC has can discretion in some cases where it's genuine mistake - 0%-15% - Answers✔NA
UK resident (living in UK for 183 days or more) pay UK income tax on both UK & foreign
income - Answers✔NA
Exempt income: interest from National Saving Certificates, interest or dividend from ISA,
winning on Premium Bond, income from lottery/gaming, social security benefit. child benefit -
Answers✔NA
1
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
AIA: deduct cost of plan, machinery, computer tool, but not car, land, building or one-off legal
fee up to AIA count (£1 million)
Note: of accounting period is less than 12 months, writing down allowance needs to be pro-rated.
For example, 8-month a/c period: x 8/12 - Answers✔NA
If cost of capital asset, or is for car, land or building exceed AIA, can deduct fixed % of cost of
asset (18% for most asset; 6% for long-life asset). Value of asset is deducted by amount of
allowance taken. This allows taxpayer to claim tax deduction for cost of an asset over time. -
Answers✔NA
Partner's income tax is based on profit of the partnership even if not distributed. - Answers✔NA
If a business a/c period (basis period) does not align with tax year, in its first 2 years of
operation, some profits will be taxed twice (overlap profit). Generally, this cannot be recovered,
unless it changes basis period to more closely align with tax yea or when it ceases to trade
(overlap relief). - Answers✔NA
How to calculate income tax:
1. Add up all income in each category (non-saving income, saving income, dividend)
2. Deduct allowable relief (e.g. qualifying loan, capital contribution to partnership, investment in
close trading company, payment of IHT)
3. Deduct personal allowance (£12,570 - tapered by £1 for every £2 of income above £100,000)
& marriage allowance
4. Separate each category
5. Tax each category
6. Add up all tax payable
7. Deduct any tax already paid - Answers✔NA
Taper - e.g. £120k taxable income (does not include exempt income such as interest from ISA),
personal allowance is deducted by £20k/2=£10k. - Answers✔NA
If the total income includes exempt income such as Business Asset Disposal Relief is available.
If so, only apply 10% to the gain. - Answers✔
Marriage allowance - transfer part of unused personal allowance to spouse =£1,260 (fixed)
Conditions: Must be married, transferor's income must be less than PA, recipient must be basic
rate taxpayer)
Transferor reduces their allowance by amount transferred: £12,570- £1,260=£11,310
2
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Recipient receives income tax liability reduction of 20% of amount transferred = 20% x £1,260 =
£252 - Answers✔NA
Non-saving income tax band -
£1-£37,700: 20% >Basic rate
£37,701-£150k: 40% >Higher rate
Over £150k: 45% >Additional rate - Answers✔NA
Saving income:
Personal Saving Allowance (PSA)
Basic rate taxpayer: £1000
Higher rate taxpayer: £500
Additional rate taxpayer: $0
PSA still uses up basic or higher rate band remained in Non-saving income tax calculation
For example, if £37k trading income after applying PA, £2200 saving
-Total income = £37k + £2200 = £39,200 > Higher rate taxpayer > £500 PSA
Since basic rate band is up to £37,700, she has £700 basic rate band remains.
First £500 of $2200 interest taxed at 0% and use up £500 of basic rate band, leaving £200 t
interest taxed at 20% and remaining of £15k taxed at 40%
Band -
Basic/Higher/Additional rate (determined by total income, saving or non-saving): 20%, 40%,
45% - Answers✔NA
Dividend income:
All taxpayer has £2,000 Dividend Allowance (DA)
Frist £2k of dividend is taxed at 0% and will use relevant portion of the band.
If taxpayer's dividend exceeds DA:
dividend within basic rate band: 7.5%
dividend within higher rate band: 32.5%
dividend within additional rate band: 38.1%
3
ALL RIGHTS RESERVED.
SQE1 – Tax Exam Questions With Verified
Answers
Tax return must be filed by 31 Jan after the tax year. For example, tax year 2025/26, return must
be filed by 31 Jan 2027. Paper return must be filed 3 months earlier, i.e. 31 Oct 2026 -
Answers✔NA
First payment is due on 31 Jan in the tax year in question. Second payment is due on 31 July
after the end of tax year. Any balance is due by 31 Jan after the end of tax year - same deadline
for filing and paying the first installment for current tax year.
In the first year of trade, no payments are required.
Since trading started during tax year 2020/21, the man would have had to pay any tax owed on
his trade income by 31 January 2022 and submit an online tax return by that same date. -
Answers✔NA
Payments on account are calculated using 50% of the prior year's income tax payable figure. -
Answers✔NA
Penalty: careless mistake: up to 30% of tax potentially lost by HMRC.
(For example, difference between declared & true amount, multiply by 20% if basic rate
taxpayer, then multiple 30% for max penalty)
Up to 100% if repeat & deliberate
HMRC has can discretion in some cases where it's genuine mistake - 0%-15% - Answers✔NA
UK resident (living in UK for 183 days or more) pay UK income tax on both UK & foreign
income - Answers✔NA
Exempt income: interest from National Saving Certificates, interest or dividend from ISA,
winning on Premium Bond, income from lottery/gaming, social security benefit. child benefit -
Answers✔NA
1
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
AIA: deduct cost of plan, machinery, computer tool, but not car, land, building or one-off legal
fee up to AIA count (£1 million)
Note: of accounting period is less than 12 months, writing down allowance needs to be pro-rated.
For example, 8-month a/c period: x 8/12 - Answers✔NA
If cost of capital asset, or is for car, land or building exceed AIA, can deduct fixed % of cost of
asset (18% for most asset; 6% for long-life asset). Value of asset is deducted by amount of
allowance taken. This allows taxpayer to claim tax deduction for cost of an asset over time. -
Answers✔NA
Partner's income tax is based on profit of the partnership even if not distributed. - Answers✔NA
If a business a/c period (basis period) does not align with tax year, in its first 2 years of
operation, some profits will be taxed twice (overlap profit). Generally, this cannot be recovered,
unless it changes basis period to more closely align with tax yea or when it ceases to trade
(overlap relief). - Answers✔NA
How to calculate income tax:
1. Add up all income in each category (non-saving income, saving income, dividend)
2. Deduct allowable relief (e.g. qualifying loan, capital contribution to partnership, investment in
close trading company, payment of IHT)
3. Deduct personal allowance (£12,570 - tapered by £1 for every £2 of income above £100,000)
& marriage allowance
4. Separate each category
5. Tax each category
6. Add up all tax payable
7. Deduct any tax already paid - Answers✔NA
Taper - e.g. £120k taxable income (does not include exempt income such as interest from ISA),
personal allowance is deducted by £20k/2=£10k. - Answers✔NA
If the total income includes exempt income such as Business Asset Disposal Relief is available.
If so, only apply 10% to the gain. - Answers✔
Marriage allowance - transfer part of unused personal allowance to spouse =£1,260 (fixed)
Conditions: Must be married, transferor's income must be less than PA, recipient must be basic
rate taxpayer)
Transferor reduces their allowance by amount transferred: £12,570- £1,260=£11,310
2
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Recipient receives income tax liability reduction of 20% of amount transferred = 20% x £1,260 =
£252 - Answers✔NA
Non-saving income tax band -
£1-£37,700: 20% >Basic rate
£37,701-£150k: 40% >Higher rate
Over £150k: 45% >Additional rate - Answers✔NA
Saving income:
Personal Saving Allowance (PSA)
Basic rate taxpayer: £1000
Higher rate taxpayer: £500
Additional rate taxpayer: $0
PSA still uses up basic or higher rate band remained in Non-saving income tax calculation
For example, if £37k trading income after applying PA, £2200 saving
-Total income = £37k + £2200 = £39,200 > Higher rate taxpayer > £500 PSA
Since basic rate band is up to £37,700, she has £700 basic rate band remains.
First £500 of $2200 interest taxed at 0% and use up £500 of basic rate band, leaving £200 t
interest taxed at 20% and remaining of £15k taxed at 40%
Band -
Basic/Higher/Additional rate (determined by total income, saving or non-saving): 20%, 40%,
45% - Answers✔NA
Dividend income:
All taxpayer has £2,000 Dividend Allowance (DA)
Frist £2k of dividend is taxed at 0% and will use relevant portion of the band.
If taxpayer's dividend exceeds DA:
dividend within basic rate band: 7.5%
dividend within higher rate band: 32.5%
dividend within additional rate band: 38.1%
3
