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100+ Free LIBF DipFA AFAT Practice Questions

Pass your LIBF DipFA Module 2 — Advanced Financial Advice: Taxation (AFAT) exam on the first try — instant access, no signup required.

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Key Facts: LIBF DipFA AFAT Exam

70%

Passing Score

LIBF Qualification Specification

90 mins

Exam Duration

LIBF Qualification Specification

60

Exam Questions

LIBF Qualification Specification

LIBF DipFA Module 2 (AFAT) is assessed via a 90-minute computer-based multiple-choice exam (60 questions total, incorporating standalone MCQs and case-study linked MCQs) with a 70% pass mark. Content covers Statutory Residence Test, Personal Allowance tapering, dividend and savings tax, pension allowances (Annual Allowance, Tapered AA, MPAA), Capital Gains Tax (exemptions, rates, BADR, PPR), Inheritance Tax (NRB £325k, RNRB £175k, PETs, CLTs, taper relief), trust taxation, and top-slicing relief on investment bonds.

Sample LIBF DipFA AFAT Practice Questions

Try these sample questions to test your LIBF DipFA AFAT exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1What are the exact start and end dates of the UK tax year for individuals?
A.1 January to 31 December
B.1 April to 31 March
C.6 April to 5 April the following calendar year
D.6 May to 5 May the following calendar year
Explanation: The UK tax year for individuals runs from 6 April in one calendar year to 5 April in the following calendar year. This historical convention stems from the calendar reform of 1752 and remains the official tax period for Income Tax and Capital Gains Tax.
2What is the official deadline for submitting an online Self-Assessment tax return and paying any outstanding tax due for the tax year ending 5 April 2024?
A.31 October 2024
B.31 December 2024
C.31 January 2025
D.5 April 2025
Explanation: The statutory deadline for submitting an online Self-Assessment tax return and paying the balancing tax payment (along with any first payment on account) is 31 January following the end of the tax year. For the 2023/24 tax year ending 5 April 2024, the deadline is 31 January 2025.
3An individual fails to pay their Self-Assessment tax liability due on 31 January. Under HMRC rules, at what point is the initial 5% late payment penalty applied to the outstanding tax?
A.1 day late (1 February)
B.30 days after the due date (3 March)
C.60 days after the due date
D.6 months after the due date
Explanation: HMRC applies an initial late payment penalty of 5% on any tax remaining unpaid 30 days after the due date (usually 3 March). Additional 5% penalties apply if the tax remains unpaid after 6 months and 12 months, alongside daily interest charges.
4Under the UK Statutory Residence Test (SRT), an individual who was non-resident in all of the previous three tax years will automatically be treated as non-UK resident if they spend fewer than how many days in the UK during the tax year?
A.16 days
B.30 days
C.46 days
D.90 days
Explanation: Under the first automatic overseas test of the SRT, an individual who was non-resident in all of the previous three tax years is automatically non-UK resident if they spend fewer than 46 days in the UK during the tax year. If they were resident in one or more of the previous three years, the threshold drops to fewer than 16 days.
5Under the Statutory Residence Test (SRT), what is the threshold number of days spent in the UK during a tax year that automatically makes an individual UK resident, regardless of any other factors?
A.91 days
B.120 days
C.183 days
D.270 days
Explanation: Under the first automatic UK test, an individual is automatically resident in the UK for a tax year if they spend 183 days or more in the UK during that tax year. No further tests or ties need to be examined once this condition is met.
6David was UK resident in 2 of the previous 3 tax years (a 'leaver'). In the current tax year, he spent 100 days in the UK and has 3 UK ties. Under the Statutory Residence Test (SRT) Sufficient Ties Test, what is David's UK tax residence status?
A.Non-UK resident, because he spent under 183 days in the UK
B.Non-UK resident, because 100 days is below the 121-day threshold for leavers with 3 ties
C.UK resident, because for a leaver with 3 UK ties, spending 91 to 120 days in the UK results in UK residence
D.UK resident, only if he worked full-time in the UK
Explanation: For a 'leaver' (resident in 1+ of the previous 3 tax years) with 3 UK ties, the day count bands under the Sufficient Ties Test dictate that spending 91 to 120 days in the UK makes the individual UK resident. Since David spent 100 days (falling in the 91–120 range), he is UK resident.
7Which statement correctly describes how a Domicile of Origin is acquired under UK tax law?
A.It is chosen voluntarily by an individual upon reaching the age of 18
B.It is automatically assigned at birth, usually taking the domicile of the child's father if the parents are married
C.It is automatically granted after residing in the UK for 15 consecutive tax years
D.It is determined solely by the country in which the individual holds citizenship
Explanation: A Domicile of Origin is assigned by law at birth. For a legitimate child whose parents are married, it takes the domicile of the father at the time of birth. It is extremely tenacious and remains until a new Domicile of Choice is validly acquired.
8To successfully acquire a Domicile of Choice outside the UK, what two legal conditions must a UK-domiciled individual satisfy?
A.Spend at least 90 days abroad and purchase a holiday home
B.Relinquish UK citizenship and reside abroad for 3 full tax years
C.Establish physical residence in the new country and form a clear, intention to reside there permanently or indefinitely
D.Transfer all bank accounts abroad and marry a foreign national
Explanation: Acquiring a Domicile of Choice requires both actual physical presence (fact) in the new jurisdiction and a clear, demonstrable intention to reside there permanently or indefinitely (animus). The burden of proof rests heavily on the taxpayer to displace their Domicile of Origin.
9Under deemed domicile rules applicable to Income Tax, Capital Gains Tax, and Inheritance Tax, when does a non-domiciled individual become deemed UK domiciled?
A.After being UK tax resident for at least 5 out of the last 10 tax years
B.After being UK tax resident for at least 10 out of the last 15 tax years
C.After being UK tax resident for at least 15 out of the last 20 tax years
D.After being UK tax resident for 20 consecutive tax years
Explanation: Under statutory deemed domicile rules, a non-UK domiciled individual becomes deemed UK domiciled for all tax purposes (Income Tax, CGT, and IHT) once they have been UK resident for at least 15 of the 20 tax years immediately preceding the relevant tax year.
10An un-domiciled UK resident individual has resided in the UK for 12 of the previous 14 tax years and claims the remittance basis. What annual Remittance Basis Charge (RBC) must they pay to HMRC to maintain this claim?
A.£20,000
B.£30,000
C.£60,000
D.£90,000
Explanation: Long-term UK residents claiming the remittance basis pay an annual Remittance Basis Charge: £30,000 if resident in at least 7 of the previous 9 tax years, and £60,000 if resident in at least 12 of the previous 14 tax years. Beyond 15 out of 20 years, deemed domicile applies.

About the LIBF DipFA AFAT Exam

LIBF DipFA Module 2 (AFAT) tests advanced knowledge of UK tax legislation, income tax, CGT, IHT, statutory residence, pension tax relief, trust taxation, and tax planning suitability.

Questions

60 scored questions

Time Limit

90 minutes

Passing Score

70%

Exam Fee

£275 module fee (or included in full £1,475 DipFA registration) (London Institute of Banking & Finance (LIBF))

LIBF DipFA AFAT Exam Content Outline

15%

UK Tax System and Residence/Domicile

Statutory Residence Test (SRT), domicile rules, deemed domicile (15/20 years), self-assessment, and HMRC compliance.

25%

Income Tax Planning and Pensions

Personal Allowance tapering, income tax rates/bands, savings rate & allowance, dividend tax, property income (Sec 24), and pension tax relief (Annual Allowance, Tapered AA, MPAA).

20%

Capital Gains Tax (CGT)

CGT annual exemption (£3,000), CGT rates (investments vs residential property), loss offsetting, Business Asset Disposal Relief (BADR), PPR, and share matching rules.

25%

Inheritance Tax (IHT) Planning

Nil Rate Band (£325k), Residence Nil Rate Band (£175k), spousal transfers, PETs & 7-year rule, CLTs & 20% entry tax, taper relief, and 40% death rate.

15%

Trusts, Business Tax, and Wrapper Taxation

Bare trusts, interest in possession trusts, discretionary trusts (periodic & exit charges), onshore/offshore bond top-slicing relief, and Consumer Duty compliance.

How to Pass the LIBF DipFA AFAT Exam

What You Need to Know

  • Passing score: 70%
  • Exam length: 60 questions
  • Time limit: 90 minutes
  • Exam fee: £275 module fee (or included in full £1,475 DipFA registration)

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

LIBF DipFA AFAT Study Tips from Top Performers

1Memorize exact tax thresholds: £12,570 Personal Allowance, £100,000 tapering threshold, £3,000 CGT exemption, £325,000 IHT NRB, and £175,000 RNRB.
2Practise IHT taper relief calculations on PETs given 3 to 7 year timelines.
3Understand top-slicing relief for onshore and offshore investment bond gains.
4Study discretionary trust taxation including the 45%/39.35% trustee rates and 10-year periodic charges.

Frequently Asked Questions

What is LIBF DipFA AFAT?

AFAT is Module 2 (Advanced Financial Advice: Taxation) of the LIBF Level 4 Diploma for Financial Advisers, testing UK tax legislation and advice application.

How is the AFAT exam formatted?

It is a 90-minute computer-based exam consisting of standalone multiple-choice questions and case-study scenario MCQs, requiring a 70% pass mark.

What topics are tested on DipFA AFAT?

Topics include Income Tax (tapering, pensions, dividends), CGT (rates, BADR, PPR), IHT (NRB, RNRB, PETs, CLTs, taper relief), Statutory Residence Test, and trust taxation.