Level 4 -Personal tax- AAT sample assessments 1 and 2 questions

Yalda20

Hi everyone,

Has anyone recently taken the AAT level 4 Personal tax exam and wouldn't mind sharing their experience please?

I am stuck/not sure about some questions on the AAT sample assessments and 2. Can somebody be kind enough to explain these for me please? I am totally lost with these:

1: Sample Assessment 1 Question 8, part B (iii) Please see the first attachment.The correct answer is £224. How do you work this out?

2: Sample assessment 2- Question 7 part B. Please see the second attachment. The correct answer is £0?why?

3: Sample assessment 2- Question 8- Please see the third and fourth attachment.

Q8 AAT Sample assessment 2-If Ben has paid £10 per month towards the cost of private fuel instead of the car I thought it would not have any effect as if an employee partially contributes this has no effect but the correct answer says it will increase the person's taxable income?

Q8 AAT Sample assessment 2 - If Ben had re-paid the £2,000 off the second loan one week earlier. His taxable income will decrease. I am not sure why and how?


Q8 AAT Sample assessment 2- If Ben had invested £5,000 from his building society account into a new interest bearing bank account. There will be no effect. I do not understand this.

Q13 AAT Sample assessment 2- Please see the 5th attachment.

I think the 40% s the death rate tax. but not too sure where the 20% is coming from?

Many thanks

hal978

1: Sample Assessment 1 Question 8, part B (iii) Please see the first attachment.The correct answer is £224. How do you work this out?

£18,700 is the list price (2431 / 0.13) x the 6% difference x 20% basic rate = £224

2: Sample assessment 2- Question 7 part B. Please see the second attachment. The correct answer is £0?why?

Because of £3,000 employment allowance.

Q8 AAT Sample assessment 2-If Ben has paid £10 per month towards the cost of private fuel instead of the car I thought it would not have any effect as if an employee partially contributes this has no effect but the correct answer says it will increase the person's taxable income?

Yes there wouldn't be any effect if the employee partially contributes, but if an employee pays for all the fuel for personal use, there wouldn't be any benefit.

Q8 AAT Sample assessment 2 - If Ben had re-paid the £2,000 off the second loan one week earlier. His taxable income will decrease. I am not sure why and how?

Because there is a £10,000 threshold before an employee is assessed as a benefit-in-kind on a beneficial loan. If he paid off some of his loan one week earlier, he would have owed less than £10,000 so there would be no benefit-in-kind. He owed £11,000 as of 6 April 2016 (before repayment).

Q8 AAT Sample assessment 2- If Ben had invested £5,000 from his building society account into a new interest bearing bank account. There will be no effect. I do not understand this.

Because he is just moving money from one interest-bearing account to another.

I think the 40% s the death rate tax. but not too sure where the 20% is coming from?

Chargeable lifetime transfers are at 20%.

Yalda20

@hal978 - thank you so much for detailed response. I will look at your answers later on. It's very kind of you. I really appreciate it. Thank you so much

Yalda20

Hi All,

Has anyone compeleted the AAT assessment 2 Q13?

I am not sure if it is me or if there is an error in that question?

My question is why £6,000 of annual allowance being deducted? the tax is being calculated at death and the annual exmeptions are for lifetime gifts only. This has really confused me.

Can @AAT_Team or anyone else please confirm this for me?

Thank you in advance.

Yalda

Yalda20

I have attached the answers too. Thank you.

hal978

I found it in the book: £3,000 annual exemption of gifts for the current year plus last years if not used.
Do you use any books to study? It's in page 7.4 of the Osborne Tutorial.

Yalda20

@hal978 - thank you for your answer.

I do use a book of course and I know it is an annual exemption for the current year and last year.

However, the annual exemptions are only used for lifetime gifts and not when someone passes away. This is what I understood from my tutor and the Kaplan books.

The question is saying to find the IHT due at death. As per my understanding we would not use the annual exemption in here at all. I am not sure if someone else different?

Thank you.

hal978

It was a potentially exempt transfer at the time so there was an entitlement to £6,000 of exemptions. You don't lose that entitlement if you die within 7 years, i.e. if it becomes a chargeable transfer on death.

Yalda20

Hey,
Agree with you that it was a PET at the time and it has now become chargeable at death.
To be honest, I asked my tutor at the time about this and he said the Annual exempt gets consumed even if it's a PET so I am doubting this now. My teacher had given us wrong answers quite a few times so I am unsure.

Do you have any example from the Osborne book which you could kindly please send me in here with the answer for peace of mind?

I appreciate your assistance. Thank you so much

hal978

The example in the book is too long for me to type (it's probably breach of copyright as well). But it does say that a PET is the net amount after the £6,000 is deducted.

Yalda20

Hey,

No worries at all. Thank you so much.

All the best for your upcoming exam.

Yalda

hal978

Thank you.
I took it today - it wasn't easy!

Yalda20

Hey,

Don't worry I am sure you did well. Thanks again for all your help. Appreciate it big time