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100+ Free AAT L4 Business & Personal Tax Practice Questions

AAT Level 4 Diploma in Professional Accounting (Q2022) - Business Tax (BNTA) & Personal Tax (PNTA) practice questions are available now; exam metadata is being verified.

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A sole trader ceases to trade. On cessation, the main pool has a tax written down value of £8,000 and assets are sold for £5,000. What capital allowance adjustment arises?

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2026 Statistics

Key Facts: AAT L4 Business & Personal Tax Exam

70%

Competency Pass Mark

AAT Assessment Information

2 of 5

Optional Units Chosen

AAT Level 4 Diploma

19-25%

Corporation Tax Rates

GOV.UK Corporation Tax FY2024

£12,570

Personal Allowance

GOV.UK 2024/25

£3,000

CGT Annual Exempt Amount

GOV.UK 2024/25

£90,000

VAT Registration Threshold

GOV.UK from April 2024

AAT Level 4 Business Tax (BNTA) and Personal Tax (PNTA) are optional units of the Q2022 Professional Diploma; students choose two of five optional units. Both are computer-based assessments combining objective and computation tasks, marked to a 70% competency threshold. BNTA covers trading profit adjustments, capital allowances, sole trader, partnership and corporation tax, and business chargeable gains. PNTA covers UK income tax, national insurance, capital gains tax and inheritance tax basics, plus ethical tax planning. Current assessments use Finance Act 2024 rates: corporation tax 19% to 25%, personal allowance £12,570, CGT annual exempt amount £3,000, and the £90,000 VAT registration threshold from April 2024.

Sample AAT L4 Business & Personal Tax Practice Questions

Try these sample questions to test your AAT L4 Business & Personal Tax exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A sole trader's profit and loss account shows a net profit of £80,000. This figure includes £4,000 of depreciation and £1,200 of client entertaining. When adjusting the accounting profit to the tax-adjusted trading profit, how should these two items be treated?
A.Add back both depreciation and client entertaining
B.Deduct both depreciation and client entertaining
C.Add back depreciation only; client entertaining is allowable
D.Add back client entertaining only; depreciation is allowable
Explanation: Depreciation is not an allowable trading deduction because capital allowances replace it, so it must be added back. Client (business) entertaining is specifically disallowed for tax, so it is also added back. Both increase the tax-adjusted profit by £5,200 in total.
2Under the FA2024 corporation tax regime, a standalone company with taxable total profits of £40,000 for the year ended 31 March 2025 pays corporation tax at which rate?
A.25% main rate
B.19% small profits rate
C.26.5% marginal effective rate
D.0% as it is below the threshold
Explanation: For FY2024, companies with augmented profits at or below the lower limit of £50,000 pay the small profits rate of 19%. As £40,000 is below £50,000, the 19% rate applies with no marginal relief.
3A trading company buys a new piece of qualifying plant and machinery costing £120,000 in its year ended 31 December 2024. The company has no associated companies and has not used its Annual Investment Allowance. What is the maximum capital allowance available on this purchase in the year?
A.£21,600 (18% writing down allowance)
B.£60,000 (50% first-year allowance)
C.£120,000 (full Annual Investment Allowance)
D.£1,000,000 (the AIA limit)
Explanation: The Annual Investment Allowance gives 100% relief on qualifying plant and machinery up to £1,000,000 per year. As the £120,000 cost is well within the limit, the full amount can be claimed, giving a £120,000 allowance.
4For the 2024/25 tax year, an individual has employment income of £60,000 and no other income. Using the standard personal allowance and the basic rate band, how much of their income is taxed at the higher rate of 40%?
A.£22,300
B.£12,570
C.£0
D.£9,730
Explanation: Taxable income is £60,000 minus the £12,570 personal allowance = £47,430. The basic rate band is £37,700, so income above this is £47,430 minus £37,700 = £9,730 taxed at 40%.
5An individual disposes of shares in 2024/25 realising a chargeable gain of £18,000. They have no other disposals. Using the 2024/25 annual exempt amount, what is the taxable gain after the exemption?
A.£15,000
B.£18,000
C.£6,000
D.£3,000
Explanation: The capital gains tax annual exempt amount for 2024/25 is £3,000. Deducting this from the £18,000 gain leaves a taxable gain of £15,000.
6From 6 April 2024, what change was made to compulsory Class 2 National Insurance contributions for self-employed individuals with profits above the small profits threshold?
A.The rate increased to 9%
B.Compulsory Class 2 NIC was abolished, but contributory benefit entitlement is preserved
C.Class 2 was merged into Class 1
D.Class 2 became payable only above £50,270 of profit
Explanation: From 6 April 2024, compulsory Class 2 NIC was abolished. Self-employed individuals with profits above the small profits threshold are treated as having paid Class 2 so their entitlement to contributory benefits, such as the state pension, is preserved without a cash payment.
7A company has a 9-month accounting period ending 31 December 2024. It is a standalone company. What are the corporation tax lower and upper profit limits for this period?
A.£50,000 and £250,000
B.£50,000 and £187,500
C.£37,500 and £187,500
D.£37,500 and £250,000
Explanation: The £50,000 lower and £250,000 upper limits apply to a 12-month period and must be time-apportioned for shorter periods. For 9 months: £50,000 x 9/12 = £37,500 and £250,000 x 9/12 = £187,500.
8Which of the following expenses incurred by a sole trader is an ALLOWABLE deduction when computing tax-adjusted trading profit?
A.A parking fine incurred by the owner while on a business trip
B.Staff Christmas party costing £120 per head
C.Repairs to restore a recently purchased dilapidated asset to working order
D.Trade debts written off as irrecoverable
Explanation: Specific (trade) bad debts written off are an allowable deduction as they are incurred wholly and exclusively for the trade. Fines, capital-nature repairs and excessive staff entertaining are disallowable.
9In 2024/25 an employee earns a salary of £35,000. The Class 1 primary (employee) NIC main rate is 8% on earnings between the primary threshold of £12,570 and the upper earnings limit. Approximately how much Class 1 primary NIC is due?
A.£1,794
B.£2,800
C.£2,686
D.£1,070
Explanation: Earnings subject to the 8% main rate are £35,000 minus the £12,570 primary threshold = £22,430. At 8%, the NIC is £22,430 x 8% = £1,794 (to the nearest pound).
10A higher-rate taxpayer disposes of a residential investment property in 2024/25 making a taxable gain (after the annual exempt amount) of £40,000. What rate of capital gains tax applies to this gain for 2024/25?
A.10%
B.24%
C.18%
D.20%
Explanation: For 2024/25, gains on residential property for a higher-rate taxpayer are taxed at 24% (reduced from 28% on 6 April 2024). Non-residential gains for higher-rate taxpayers are taxed at 20%.

About the AAT L4 Business & Personal Tax Practice Questions

Verified exam format metadata for AAT Level 4 Diploma in Professional Accounting (Q2022) - Business Tax (BNTA) & Personal Tax (PNTA) is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.