How to Pass ACCA TX (Taxation)

ACCA TX exam format

TX is a 3 hours 15 minutes computer-based exam, available on demand throughout the year. Unlike LW (which is entirely objective test), TX combines objective test questions with constructed response questions requiring written calculations.

Pass mark: 50%

Section C is the most important section for preparation. The two constructed response questions are typically a larger income tax or corporation tax computation (15–20 marks) and a second question drawing from another area of the syllabus. These require written calculations — shown workings earn marks even when final figures are incorrect.

Section A and B are entirely objective test — multiple choice, multiple response, and OT case format. These should be answered fluently to leave maximum time for Section C.

ACCA TX syllabus — what does it cover?

Income tax (Area B) and corporation tax (Area E) together account for 50% of the paper — they are the non-negotiable core of TX. CGT and VAT are also heavily tested. IHT is important but slightly lighter in weighting. Stamp taxes and tax administration carry the lowest weighting and are often tested in Section A.

The most important TX topics

Income tax (Syllabus area B)

Income tax is the bedrock of TX and almost always features in Section C. The key skills are: constructing a complete income tax computation from scratch; understanding how different types of income are taxed (non-savings, savings, dividend income — each has different tax bands and rates); applying the personal allowance and its tapering above £100,000; computing employment income (including benefits in kind — company cars, accommodation, loans); computing trading income (basis periods, overlap profits, adjustments to accounting profit); computing property income; applying reliefs (pension contributions, Gift Aid, trading losses).

The personal allowance taper (reducing by £1 for every £2 of income above £100,000, creating an effective 60% marginal rate between £100,000 and £125,140 for 2025/26) is a consistent Section C topic and a source of mistakes for students who don't know it precisely.

NIC (National Insurance Contributions): Class 1 (employed earners, both employee and employer), Class 1A (employers on benefits in kind), Class 2 and Class 4 (self-employed). TX tests NIC calculations alongside income tax — know the thresholds and rates for each class.

Benefits in kind: The company car benefit is the most tested benefit. Know the CO₂-based percentage, how the list price is used, the fuel benefit calculation, and how accommodation and interest-free loans are valued.

Corporation tax (Syllabus area E)

Corporation tax is the other major Section C area. The core skill is computing taxable trading profits: start with accounting profit, add back disallowable expenditure (entertaining, depreciation, non-trading losses), deduct capital allowances (Annual Investment Allowance (AIA), writing-down allowances (WDA), the different pools — main pool at 18% WDA, special rate pool at 6% WDA), then apply the corporation tax rate.

Corporation tax rates from April 2023: The main rate is 25% for profits over £250,000. The small profits rate is 19% for profits under £50,000. Marginal relief applies between £50,000 and £250,000 — know the marginal relief fraction and how to calculate it.

Groups: Group relief (surrendering trading losses between 75% group companies), group payment arrangements, and capital gains groups. Questions regularly test which companies are in the same group and what relief is available.

Losses: Trading losses can be carried back one year or carried forward indefinitely. The interaction of losses with group relief is consistently tested.

Capital Gains Tax (Syllabus area C)

CGT calculations for individuals: chargeable gain = proceeds − cost − enhancement expenditure − incidental costs. Apply the annual exempt amount (£3,000 for 2024/25). Apply the correct rate (10%/20% for most assets, 18%/24% for residential property).

Principal Private Residence (PPR) relief: The most commonly tested CGT relief. Know the period of actual occupation (always exempt), the final 9 months (always exempt), and any periods of absence that qualify for relief (working abroad, job-related accommodation).

Business Asset Disposal Relief (BADR): 10% CGT rate on qualifying business disposals (shares in personal company, business assets). Know the qualifying conditions: 5% ordinary share capital, 5% voting rights, officer or employee, minimum 2-year holding. Lifetime limit £1 million.

Shares: Matching rules for shares (same-day, next 30 days, share pool). Know the share pool calculation — cost per share based on pooled cost.

VAT (Syllabus area F)

VAT is practically important and consistently tested. Key topics: compulsory and voluntary registration (registration threshold currently £90,000 rolling 12-month taxable supplies); deregistration; taxable supplies (standard-rated, zero-rated, exempt — know the distinction); input tax recovery (fully recoverable, blocked, partial exemption); the VAT return calculation; annual accounting, cash accounting, and flat rate schemes.

Partial exemption: The most complex VAT topic. When a business makes both taxable and exempt supplies, input tax on exempt supplies is not recoverable. Know the standard method (based on value of supplies) and when the de minimis limit applies.

Inheritance tax (Syllabus area D)

IHT applies on transfers of value. Potentially Exempt Transfers (PETs) become chargeable if the donor dies within 7 years. Chargeable Lifetime Transfers (CLTs) are chargeable immediately (above the nil rate band). The 7-year rule and taper relief (available if death is 3–7 years after the gift) are the most tested elements.

Nil rate band: £325,000 (frozen until 2028). The residence nil rate band (RNRB) of £175,000 applies when a residence passes to direct descendants. Know the interaction between the nil rate band, RNRB, and gifts made in the 7 years before death.

Annual exemption: £3,000 per tax year (unused can be carried forward one year). Small gifts (£250 per donee), gifts in consideration of marriage/civil partnership, and normal expenditure out of income are also exempt.

How to study for ACCA TX

Know which Finance Act applies

TX is a live tax paper — the syllabus is updated annually to reflect the latest Finance Act. Make sure your study materials are for the correct tax year. The ACCA website specifies which Finance Act applies to each exam sitting — confirm this before buying materials.

Learn by doing computations from scratch

TX cannot be passed by reading. You need to practise producing full income tax computations, corporation tax computations, CGT computations, and IHT calculations from scratch — not just checking you understand the rules, but actually producing the numbers. The Section C questions require written calculations, and the only way to develop speed and accuracy is through repetition.

Start every topic by understanding the structure of the computation (the proforma), then practise producing that computation end-to-end before moving to question practice.

Build a rates and thresholds reference card

TX involves a significant number of rates, thresholds, and limits that must be remembered precisely: tax bands, NIC thresholds by class, capital allowance rates, corporation tax rates and limits, CGT rates by asset type, IHT nil rate band, VAT threshold. Build a one-page reference card as you study each topic and test yourself regularly — this is the most efficient way to retain numerical thresholds.

Note: the exam provides a tax rates and allowances sheet — but you must already know how to use the figures, not what they are. Students who have memorised the structure of each computation use the allowances sheet efficiently; those who haven't use it slowly and run out of time.

Prioritise income tax and corporation tax above everything else

Together these account for 50% of the paper and almost always dominate Section C. If you are short on time, these two areas are where revision hours pay off most. Get income tax and corporation tax solid first, then build outward to CGT, VAT, and IHT.

Practise Section C questions under timed conditions

The two Section C questions (40 marks total) determine most results. Students who practise Section C under timed conditions develop the layout habits — proforma structure, clear workings, notes on excluded items — that earn marks consistently. Students who only attempt multiple choice questions and underweight Section C preparation typically score 40–48 and narrowly miss the pass mark.

Do not neglect VAT

VAT is 15% of the paper and regularly appears in both Section B (OT case questions) and sometimes Section C. Students who treat VAT as a minor topic and leave it to the last week frequently drop 10–12 marks. Build VAT into your study plan from week 5–6 at the latest.

Common TX mistakes to avoid

Forgetting the personal allowance taper. Students often correctly calculate income tax at the standard rates but forget that the personal allowance reduces by £1 for every £2 of net adjusted income above £100,000. Missing this typically costs 3–5 marks in a Section C income tax question.

Mixing up disallowable expenditure in corporation tax. Depreciation is always disallowed (replaced by capital allowances). Client entertaining is always disallowed. Staff entertaining (Christmas party up to £150/head) is allowable. Getting these wrong in a corporation tax computation costs marks that are easy to retain.

Applying the wrong CGT rate. The CGT rate depends on the asset type (residential property vs other) and the taxpayer's income tax position (basic rate vs higher rate). Students who apply a single rate to all gains lose marks on every gain question.

Missing the VAT registration threshold trigger. VAT questions often include a scenario where a business crosses the £90,000 taxable supply threshold during the year. Students who don't identify this miss the requirement to notify HMRC and calculate the registration date correctly.

Running over time in Section A/B. The 60 marks of objective test in Sections A and B should take approximately 60–70 minutes. Students who spend 90+ minutes on these sections leave insufficient time for Section C, where the marks for partial credit on longer calculations are available.

TX study plan — 10 weeks

Is ACCA TX hard?

TX has a pass rate of approximately 50–55% — making it one of the more passable Applied Skills papers, though still requiring significant preparation. It sits above FR (40–50%) and PM (45–50%) in difficulty.

TX is distinctive in that the challenge is not conceptual complexity — most of the rules are logical once understood — but the volume of detail students must hold simultaneously and the speed required to produce accurate computations in Section C. Students who underestimate the preparation needed for Section C typically narrowly fail.

With a structured 10-week study plan, strong focus on Section C practice, and coverage of all six main tax areas, most ACCA students pass TX first time.

Frequently asked questions

What is ACCA TX?

ACCA TX (Taxation) is the UK tax paper in the ACCA Applied Skills level. It covers the main UK taxes: income tax (including employment income, trading income, and benefits in kind), National Insurance Contributions, Capital Gains Tax (CGT), Inheritance Tax (IHT), corporation tax, and VAT (Value Added Tax). It is a 3 hours 15 minutes exam combining objective test questions and written computation questions.

How hard is ACCA TX?

TX has a pass rate of around 50–55% — mid-range for Applied Skills. The challenge is not conceptual difficulty but the volume of rules and rates that must be memorised precisely, and the speed required to produce accurate computations under time pressure in Section C. With 10 weeks of structured study and strong Section C practice, most students pass first time.

What is the ACCA TX pass rate?

ACCA TX typically has a pass rate of around 50–55%, making it one of the more accessible Applied Skills papers — above FR (40–50%) and PM (45–50%).

What does the ACCA TX exam consist of?

TX is a 3 hours 15 minutes computer-based exam with three sections: Section A (15 OT questions, 30 marks); Section B (3 OT case questions, 30 marks); Section C (2 constructed response computation questions, 40 marks). Pass mark is 50%.

What topics come up most in ACCA TX?

Income tax and corporation tax each account for around 25% of the exam — together they are 50% of the paper and the primary focus of Section C. CGT and VAT each account for around 15%. IHT is around 10%. All six areas are tested in every sitting.

How long should I study for ACCA TX?

Most students prepare over 8–12 weeks of part-time study (8–10 hours per week). The final 2–3 weeks should focus heavily on full past paper practice, particularly Section C computation questions under timed conditions.