What ACCA Taxation actually tests
Taxation is 12% of the curriculum (Applied Skills level, UK variant):
| Area | What it covers |
|---|---|
| Income Tax | Employment, trading, property, and investment income; personal allowance; tax bands |
| Capital Gains Tax | Disposal proceeds, chattel rules, private residence relief, annual exempt amount |
| Inheritance Tax | Chargeable lifetime transfers, potentially exempt transfers, death estate |
| National Insurance | Class 1 (employee/employer), Class 2/4 (self-employed) |
| Corporation Tax | Taxable total profits, capital allowances, loss reliefs |
| Value Added Tax | Registration, taxable supplies, VAT returns, flat rate scheme |
Why income tax is worth building a rock-solid process for
Nearly every TX exam has an income tax computation, and the process (gross income → deductions → personal allowance → apply rate bands) is mechanical once automatic. The most common source of lost marks isn't the arithmetic — it's misapplying which band a given slice of income falls into after the personal allowance is deducted.
Sample question: Income Tax Computation
Taxation · Medium difficulty
An individual has trading income of £40,000 and no other income. Assuming a personal allowance of £12,570 and a basic rate band up to £37,700 of taxable income (taxed at 20%), with the remainder taxed at 40%, approximately how much income tax is payable?
A. £4,000
B. £5,486
C. £8,000
D. £10,972
The correct answer is B — £5,486.
Taxable income = £40,000 − £12,570 (personal allowance) = £27,430. Since £27,430 is below the £37,700 basic rate threshold, the entire taxable amount falls in the basic rate band: £27,430 × 20% = £5,486. The higher (40%) rate never actually applies here — a common trap is assuming it must, simply because the question mentions it.
Taxable income = £40,000 − £12,570 (personal allowance) = £27,430. Since £27,430 is below the £37,700 basic rate threshold, the entire taxable amount falls in the basic rate band: £27,430 × 20% = £5,486. The higher (40%) rate never actually applies here — a common trap is assuming it must, simply because the question mentions it.