Tax administration and the UK tax system: formula sheet

Key formulas

Finance Act examined

Exams June 2026 to March 2027 and June 2027 → Finance Act 2025

Royal Assent 20 March 2025. Law not yet in effect is not normally examined.

Rate assumption

2025/26 tax year and financial year to 31 March 2026 rates continue unless told otherwise

If the question gives a different rate, use the question's rate.

Rounding and apportionment

Calculations to nearest £; apportion to nearest month; show all workings

These are supplementary instructions printed in the exam.

Corporation tax marginal relief

(Upper limit − Augmented profits) × Standard fraction × Taxable total profits ÷ Augmented profits

Lower limit £50,000, upper limit £250,000, standard fraction 3/200. Small profits rate 19%, main rate 25%.

Income tax bands

Basic £1–£37,700 at 20%; higher £37,701–£125,140 at 40%; additional over £125,140 at 45%

Dividend rates are 8.75%, 33.75% and 39.35%. Dividend nil rate band £500.

Reliefs cap

Cap = higher of £50,000 or 25% of income

Applies unless the reliefs are otherwise restricted.

CGT rates

18% lower rate; 24% higher rate; annual exempt amount £3,000; BADR rate 14% with £1,000,000 lifetime limit

Investors' relief also has a £1,000,000 lifetime limit at 14%.

IHT figures

Nil rate band £325,000; residence nil rate band £175,000; lifetime rate 20%; death rate 40%

Taper relief reduces tax by 20%, 40%, 60% or 80% for gifts 3–7 years before death.

Normal rates and bands (non-savings and savings)

Basic £1 – £37,700 at 20%; Higher £37,701 – £125,140 at 40%; Additional over £125,140 at 45%

Savings income uses these same rates, after any starting rate or savings nil rate band.

Dividend rates

Basic 8.75%; Higher 33.75%; Additional 39.35%

Same bands as above. Dividends are the top slice of income.

Order of taxing income

Non-savings → Savings → Dividends

Fill the bands in this order. Dividends are taxed last, so they are most likely to fall in the higher bands.

Starting rate for savings

0% on savings income within the first £5,000 of taxable income

Available band = £5,000 – non-savings taxable income. If that is nil or negative, there is no starting rate.

Savings nil rate band

Basic rate taxpayer £1,000; higher rate taxpayer £500

Additional rate taxpayers get none. Status depends on total taxable income.

Dividend nil rate band

£500 for all taxpayers

Taxed at 0%, but it still uses up band.

Cap on income tax reliefs

Cap = higher of £50,000 and 25% × income

Applies unless the relief is otherwise restricted. Work out both figures and take the larger.

Rates

TTP ≤ £50,000: 19%. TTP ≥ £250,000: 25%. Between: 25% less marginal relief

Test against augmented profits and adjusted limits. These figures apply to the financial year 2025 and are given in the tax tables.

Marginal relief

(Upper limit – Augmented profits) × 3/200 × TTP ÷ Augmented profits

Deduct from corporation tax at 25% on TTP. The upper limit is adjusted for associated companies and short periods.

Augmented profits

TTP + exempt dividends received from non-group companies

Dividends from group (51% subsidiary) companies are ignored.

Adjusted limits

Limit ÷ (1 + number of associated companies) × months in period ÷ 12

Applies to the £50,000, £250,000 and £1,500,000 limits.

Large company instalments

Augmented profits above £1,500,000 (adjusted): equal instalments, four for a 12-month period

For a 12-month period, due 6 months and 13 days after the start of the period (the 14th day of month 7), then every 3 months: the 14th day of months 7, 10, 13 and 16. The third and fourth fall after the period ends. For a shorter period, the final instalment falls 3 months and 14 days after the period end, with earlier ones at 3-month intervals before it. The very large company threshold of £20 million is not in the tables, so learn it.

CGT rates

Lower rate 18%; higher rate 24%

Applied to taxable gains after the annual exempt amount. The rate depends on the unused basic rate band.

Annual exempt amount

£3,000

Deduct from net gains of the tax year. Set it against the gains taxed at the highest rate first (24%, then 18%, then 14%), as that saves the most tax.

BADR rate and limit

14% on qualifying gains; lifetime limit £1,000,000

Gains above the lifetime limit fall back to the normal CGT rates. BADR gains use the basic rate band before other gains do.

Investors' relief rate and limit

14% on qualifying gains; lifetime limit £1,000,000

A separate £1,000,000 limit from BADR.

IHT nil rate band

Nil rate band £325,000

Cumulates over the previous seven years for chargeable transfers.

Residence nil rate band

£175,000

Available only if its conditions are met. Check the facts before using it.

IHT rates

Lifetime 20%; death 40% on the excess over the nil rate band

Lifetime rate applies to chargeable lifetime transfers. Death rate applies to the estate and to gifts within seven years.

IHT taper relief

3-4 years 20%; 4-5 years 40%; 5-6 years 60%; 6-7 years 80% reduction in tax

Reduces the tax payable, not the gift's value. Not available for death within three years.

VAT standard rate

VAT on a standard-rated supply = net price × 20%

VAT-inclusive price ÷ 1.2 gives the net price; VAT is 1/6 of the gross amount.

Registration limit

Register when taxable supplies exceed £90,000

Given in the tax tables. The exam question will tell you the period and the supplies to be tested.

Deregistration limit

May deregister where taxable supplies are expected to fall to £88,000 or below

The tables give £88,000. State it as the lower limit that gives a gap with registration.

Late payment penalty

Up to 15 days: none | 16 to 30 days: 3% | More than 30 days: 6% plus daily penalty at an annual rate of 10%

Penalty is a percentage of the VAT unpaid. Check the number of days late carefully.

Interest on underpaid tax

Interest = tax unpaid × 8.50% × (months or days late ÷ period)

Use the assumed rate in the tables. Overpaid tax uses 3.50%.

SDLT on non-residential property, slice rates

Up to £150,000: 0% | £150,001 to £250,000: 2% | £250,001 and above: 5%

Each band applies only to the part of the price in that band. These rates are in the tax tables ACCA gives you.

SDLT when price is above £250,000

(£250,000 − £150,000) × 2% + (Price − £250,000) × 5% = £2,000 + (Price − £250,000) × 5%

The £100,000 slice gives £2,000. Use this as a check.

SDLT when price is between £150,000 and £250,000

(Price − £150,000) × 2%

No tax arises on the first £150,000.

Stamp duty on shares

Price paid × 0.5%

Paid by the buyer. The rate is flat, with no bands.

Interest on underpaid tax

Tax paid late × 8.50% × (time late ÷ 12 months, or days ÷ 365)

Rate is the assumed rate in the ATX-UK tax tables. Runs from the due date to the date of payment.

Interest on overpaid tax

Tax overpaid × 3.50% × (time held ÷ 12 months, or days ÷ 365)

Rate is the assumed rate in the tables. This is paid by HMRC to the taxpayer.

Beneficial loan benefit (average method)

((Opening balance + Closing balance) ÷ 2) × 3.75% × (months ÷ 12) − interest paid by employee

The official rate is 3.75% in the tables. Check whether the question asks for the average or the strict method.

Interest versus penalty

Interest = compensation for time. Penalty = charge for behaviour or lateness

The two can arise together on the same late payment.

Quick revision

• Exams from June 2026 to March 2027 and June 2027 examine the Finance Act 2025.
• Income tax bands: basic rate 20% on £1 to £37,700, higher rate 40% to £125,140, additional rate 45% above.
• Dividend rates are 8.75%, 33.75% and 39.35%; the dividend nil rate band is £500.
• Savings nil rate band is £1,000 for basic rate and £500 for higher rate taxpayers; 0% starting rate applies within the first £5,000 of taxable income.
• Cap on income tax reliefs: the higher of £50,000 or 25% of income, unless otherwise restricted.
• Corporation tax: small profits rate 19%, main rate 25%, limits £50,000 and £250,000; instalments threshold £1,500,000.
• CGT rates 18% and 24%; annual exempt amount £3,000; BADR and investors' relief 14% with £1,000,000 lifetime limits.
• IHT: nil rate band £325,000, residence nil rate band £175,000, lifetime rate 20%, death rate 40%.
• VAT: 20% standard rate, registration £90,000, deregistration £88,000; late payment penalties 3% (16 to 30 days) and 6% plus daily penalty (over 30 days).
• SDLT non-residential: 0% to £150,000, 2% to £250,000, 5% above; stamp duty on shares 0.5%.
• Interest: official rate 3.75%, underpaid tax 8.50%, overpaid tax 3.50%.
• Error penalties: careless 30% maximum, deliberate not concealed 70%, deliberate and concealed 100%.

Common mistakes

• Using law from a later Finance Act or a proposal not yet in force. Fix: Stay with Finance Act 2025 for these sittings. Prospective legislation is not normally examined until it takes effect.
• Overriding a rate stated in the question with the printed table. Fix: Use the question's figure when given. The 2025/26 assumption applies only unless you are instructed otherwise.
• Taxing dividends before savings or non-savings income Fix: Always stack non-savings, then savings, then dividends. Dividends are the top slice.
• Using the £1,000 savings nil rate band for a higher rate taxpayer Fix: Status depends on total taxable income including savings and dividends. If it is over £37,700, the nil rate band is £500.
• Using TTP instead of augmented profits to test the limits Fix: Always write the augmented profits line, even when it equals TTP.
• Ignoring associated companies Fix: Scan for companies under common control and divide the limits by 1 plus the number of associates.
• Applying the taper percentage to the value of the gift. Fix: Work out the death tax on the gift first, then reduce that tax by the taper percentage.
• Using taper relief for death within three years. Fix: Check the gap first. Under three years means no reduction.
• Using £90,000 as the deregistration limit. Fix: Write both numbers together: register above £90,000, deregister at £88,000 or below.
• Charging a 3% penalty for a payment 15 days late. Fix: Up to 15 days late has no penalty. The 3% band begins at 16 days.

Exam tips

• Check the question for any stated rate or date before you rely on the assumption that 2025/26 rates continue.
• Keep a mental map of the tax tables so you can find each rate quickly. Check the band or limit, not just the rate.
• Show every working and round to the nearest £. Apportion to the nearest month.
• Apply the rule to the scenario in words as well as numbers. Professional skills marks reward this.
• Do not spend time on proposed or future law. Focus on Finance Act 2025.
• The tax tables are given in the exam. Learn how to use them, not just what is in them. Know where the bands, nil rate bands and cap sit.
• Show every working, including the band left after each type of income. Marks go for method even if a figure is wrong.
• Always state the taxpayer status you used for the savings nil rate band. It shows the marker you have noticed the £1,000 and £500 difference.