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ACCA Strategic Professional · Advanced Taxation (UK)

Tax Administration and the UK Tax System for ATX-UK

This chapter covers the UK tax framework you need for ATX-UK: which Finance Act is examined, and the rates, bands, reliefs, penalties and interest figures ACCA gives you in the tax tables. You solve questions by knowing which table applies, then applying it accurately to the scenario.

What this chapter covers

This chapter sets the base for the whole ATX-UK paper. It tells you which law is examined (the Finance Act 2025 for exams from June 2026 to March 2027 and in June 2027) and walks through the figures in ACCA's tax rates and allowances: income tax, corporation tax, CGT, IHT, VAT, stamp taxes, penalties and interest.

The tables are given to you in the exam. So the skill is not memorising every number. It is knowing what each table contains, where the traps are, and how to apply a figure to a scenario. For example, the dividend rates differ from the normal rates, and marginal relief for companies uses augmented profits in the formula.

Everything later in the paper builds on this. Section A case studies and the two Section B questions are written and scenario-based. Each mixes taxes, so you will use these figures in advice on business structures, disposals, gifts, groups and ethics. Read the examinable documents too: the Student Accountant articles listed there show how the examining team wants you to answer.

Every ATX-UK question uses these rates and rules, so errors here cost technical marks everywhere. Fast, confident use of the tax tables saves time in a 3 hour 15 minute written exam, leaving more time for the professional skills marks (analysis, scepticism, commercial acumen and communication). The pass mark is 50%, and accurate use of the basics is the most reliable way to build it.

Tax administration and the UK tax system: topics in the order to study them

  1. 1Scope of the UK Tax System and Examinable DocumentsStart here to know which Finance Act is examined and which ACCA articles guide your answers.
  2. 2Income Tax Rates, Bands and the Cap on ReliefsIncome tax is the most used table, and its bands and dividend rates feed into CGT and business questions.
  3. 3Corporation Tax Rates, Marginal Relief and InstalmentsCompanies appear in most questions, and the marginal relief formula needs practice.
  4. 4CGT and IHT Rates, Allowances and ReliefsCGT rates depend on income tax bands, so do it after income tax; IHT follows on the same gifts and disposals themes.
  5. 5VAT Registration, Rates and Late Payment PenaltiesA short, rule-based table that is easy to learn once the main taxes are secure.
  6. 6Stamp Taxes: SDLT on Non-Residential Property and Stamp DutySmall tables that add marks in property and share purchase scenarios.
  7. 7Interest on Underpaid and Overpaid Tax and the Official RateFinish with interest and penalties, which link to compliance and error advice.

How to prepare Tax administration and the UK tax system

Treat this chapter as a map of the tax tables plus the rules that sit behind them. Learn the structure, then practise using the figures in scenarios.

  1. Read the examinable documents notes and the listed Student Accountant articles, especially those on the tax tables and the examiner's approach.
  2. Get a copy of the tax rates and allowances and go table by table. For each, write down what it contains and what it does not.
  3. For income tax, practise computing tax with normal, savings and dividend income, and check the cap on reliefs (the higher of £50,000 or 25% of income, unless otherwise restricted).
  4. Practise the corporation tax marginal relief formula until you can do it quickly: (Upper limit – Augmented profits) × 3/200 × Taxable total profits ÷ Augmented profits.
  5. Work through short calculations for CGT, IHT taper relief, VAT penalties, SDLT bands and interest.
  6. Attempt past Section B questions under time, using the tables as you would in the exam, and write short advice, not just numbers.
  7. In the last week, re-read your one-page summary and redo any calculation you got wrong.

Common mistakes in Tax administration and the UK tax system

  • Using normal income tax rates on dividends

    Fix: Tax non-savings income first, then savings, then dividends, and use the dividend rates for dividends.

  • Forgetting augmented profits in marginal relief

    Fix: Use augmented profits in the (Upper limit – Augmented profits) part and in the denominator; taxable total profits is the multiplier.

  • Applying SDLT as a single rate on the whole price

    Fix: Apply each rate only to the slice of the price in that band.

  • Mixing up the interest rates

    Fix: Link each to its meaning: 8.50% is paid on underpaid tax, 3.50% received on overpaid tax, 3.75% is the official rate for benefits-type loans.

  • Giving only numbers with no advice

    Fix: State the conclusion, apply it to the client's facts, and explain the impact in plain language.

  • Ignoring time limits on taper relief and VAT penalties

    Fix: Check the exact range in the table. Taper relief only applies where death is more than three years after the gift.

Last-day revision: Tax administration and the UK tax system

  • 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%.

Tax administration and the UK tax system practice questions

Tax administration and the UK tax system in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Tax administration and the UK tax system: frequently asked questions

Which Finance Act is examined in ATX-UK?

Exams from June 2026 to March 2027 and in June 2027 examine the Finance Act 2025. Prospective legislation is not normally examined until it takes effect.

Do I need to memorise the tax rates for ATX-UK?

No, ACCA provides the tax rates and allowances. You do need to know what each table contains and how to apply it quickly, so practise with the tables open.

Is ATX-UK exam written or objective test?

It is fully written. Section A is a 50-mark case study and Section B has two compulsory 25-mark questions. There are 80 technical and 20 professional skills marks overall.

What is the cap on income tax reliefs?

Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income. Check whether a specific relief has its own restriction.

What happens if I pay VAT late?

Up to 15 days late has no penalty. At 16 to 30 days it is 3%, and over 30 days it is 6% plus a daily penalty at an annual rate of 10%.