100+ Free ICAEW Principles of Taxation Practice Questions
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Which of the following is a chargeable gain that forms part of a company's taxable total profits?
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Key Facts: ICAEW Principles of Taxation Exam
42
Exam Questions
ICAEW Principles of Taxation Module Page
55%
Pass Mark
ICAEW Exam Guidance
1.5 hrs
Exam Duration
ICAEW Principles of Taxation Module Page
25%
Income Tax and NIC Weighting
ICAEW Syllabus Handbook
20%
Corporation Tax Weighting
ICAEW Syllabus Handbook
20%
VAT Weighting
ICAEW Syllabus Handbook
The ICAEW Principles of Taxation exam (Tax Fundamentals under the Next Generation ACA) is a 1.5-hour computer-based objective test with a 55% pass mark. It has 42 questions: 40 worth two marks each (multiple choice, multi-part, multiple-response or numeric entry) plus two 10-mark scenario questions on income tax/NIC and corporation tax. The syllabus is weighted roughly Income Tax and NIC 25%, Corporation Tax 20%, VAT 20%, Objectives/Administration/Ethics 15%, Capital Gains Tax 15%, and wider Administration and the ethical/legal context 5%. Questions are grounded in UK rules such as the 2025/26 £12,570 personal allowance, £3,000 CGT annual exempt amount, 19%-25% corporation tax rates and the £90,000 VAT registration threshold.
Sample ICAEW Principles of Taxation Practice Questions
Try these sample questions to test your ICAEW Principles of Taxation exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Which of the following is a recognised economic objective that a government may pursue when designing a system of taxation?
2Adam Smith's canons of taxation include the principle that the amount, timing and manner of payment of a tax should be clear to the taxpayer. Which canon does this describe?
3Which UK body is responsible for the administration and collection of taxes such as income tax, corporation tax and VAT?
4A direct tax is best described as a tax that is:
5Which of the following best describes 'tax avoidance' as distinct from 'tax evasion'?
6The ICAEW Code of Ethics is built on five fundamental principles. Which of the following is one of those principles?
7An accountant prepares tax returns for two clients who are in direct competition and both want the accountant's advice on the same commercial opportunity. Which threat to the fundamental principles is most clearly raised?
8Under the threats and safeguards framework, which of the following is an example of a safeguard created by the profession, legislation or regulation?
9An accountant becomes aware that a client has deliberately understated taxable profits. After advising the client to disclose and the client refusing, what is the accountant's likely obligation regarding money laundering?
10What is the standard UK personal allowance for income tax for the 2025/26 tax year (before any tapering)?
About the ICAEW Principles of Taxation Exam
Principles of Taxation (renamed Tax Fundamentals under the Next Generation ACA) is an ICAEW Certificate Level module covering the objectives and administration of UK taxation, ethics, income tax and NIC, capital gains tax, corporation tax, and VAT. The computer-based exam lasts 1.5 hours, contains 42 questions and is passed at 55%.
Questions
42 scored questions
Time Limit
1.5 hours (90 minutes)
Passing Score
55% of the available marks
Exam Fee
ICAEW student registration plus a per-exam entry fee; confirm current amounts on the ICAEW fees page (ICAEW (Institute of Chartered Accountants in England and Wales))
ICAEW Principles of Taxation Exam Content Outline
Objectives, Administration and Ethics
Purposes and principles of taxation, direct and indirect taxes, the role of HMRC, the legal framework, the five fundamental ethical principles, threats and safeguards, conflicts of interest, money laundering, and tax avoidance versus evasion.
Income Tax and National Insurance Contributions
Personal allowance and bands, employment income and benefits, trading income and capital allowances, savings and dividend income, reliefs such as Gift Aid, PAYE, and Class 1, 1A, 2 and 4 National Insurance contributions.
Capital Gains Tax
Chargeable persons, assets and disposals, the annual exempt amount, CGT rates, exempt assets, spouse transfers, capital losses, and reliefs including Business Asset Disposal Relief and rollover relief.
Corporation Tax
Taxable total profits, the main and small profits rates, marginal relief, associated companies, capital allowances, trading losses, chargeable gains, accounting periods, payment deadlines and instalments.
Value Added Tax
Registration and deregistration thresholds, output and input VAT, standard, reduced, zero-rated and exempt supplies, the tax point, VAT invoices, special schemes, returns under Making Tax Digital and VAT penalties.
Administration, Compliance and the Ethical/Legal Context
Self Assessment filing and payment deadlines, payments on account, record keeping, HMRC penalties and interest, appeals and tribunals, and the sources of UK tax law including Finance Acts and case law.
How to Pass the ICAEW Principles of Taxation Exam
What You Need to Know
- Passing score: 55% of the available marks
- Exam length: 42 questions
- Time limit: 1.5 hours (90 minutes)
- Exam fee: ICAEW student registration plus a per-exam entry fee; confirm current amounts on the ICAEW fees page
Keys to Passing
- Complete 500+ practice questions
- Score 80%+ consistently before scheduling
- Focus on highest-weighted sections
- Use our AI tutor for tough concepts
ICAEW Principles of Taxation Study Tips from Top Performers
Frequently Asked Questions
How many questions are on the ICAEW Principles of Taxation exam?
The exam has 42 questions. Forty questions are worth two marks each and use multiple choice, multi-part multiple choice, multiple-response or numeric entry formats, plus two scenario-based questions worth 10 marks each, one on income tax and NIC and one on corporation tax.
What is the pass mark for Principles of Taxation?
The pass mark is 55% of the available marks. The exam lasts 1.5 hours and is a computer-based objective test, so candidates must score at least 55% across the 42 questions to pass.
Has Principles of Taxation been renamed?
Under the Next Generation ACA, the Certificate Level Principles of Taxation module is being renamed Tax Fundamentals. The syllabus content remains the UK taxes of income tax, NIC, capital gains tax, corporation tax and VAT, plus ethics and administration.
Which taxes does the exam cover?
It covers UK income tax and National Insurance contributions, capital gains tax, corporation tax, and value added tax, together with the objectives and administration of taxation and professional ethics. Income tax and NIC carry the highest weighting at around 25%.
How long is the Principles of Taxation exam?
Candidates have 1.5 hours (90 minutes) to complete the computer-based exam. From March 2026, an extra five minutes may appear in the appointment length for an optional survey, but this does not form part of the exam time.
Is the exam multiple choice?
Largely, yes. The 40 two-mark questions are objective (multiple choice, multi-part, multiple-response or numeric entry), making the module highly suited to MCQ-style practice. The two 10-mark scenario questions require structured tax computations on income tax/NIC and corporation tax.
How should I prepare for Principles of Taxation?
Learn the current UK rates and thresholds, practise income tax, CGT, corporation tax and VAT computations, and drill the ethics and administration topics. Most candidates spend around 60-90 hours and complete timed 42-question mocks against the 55% pass mark.