How to Pass ACCA Taxation – The Ultimate Guide

If you’re wondering how to pass ACCA Taxation, this comprehensive guide will tell you everything you need to know to pass the first time. Whether you’ve got Taxation (TX) coming up, are considering enrolling or want to know how to resit, you need to keep reading. Before we start, it is essential to know that there are many variants of ACCA Taxation – the UK paper, Ireland Paper, Malaysian Paper, etc.

These relate to the country you are studying and the relevant tax legislation in place. In this guide, we will be referring to the TX-UK Paper. However, the advice given is relevant to all taxation students. You can choose the exam you will be sitting for, depending on the country and tax laws that are most relevant to your career. Read more about the ACCA variant exams.

Overview

The Taxation syllabus is designed to introduce you to the tax system and provide you with core knowledge of the underlying principles and technical areas and how these affect the activities of individuals and businesses. The syllabus covers a range of different taxes that an accountant needs to have a detailed knowledge of. This includes computing tax liabilities, explaining calculations, complying with regulations, and planning for businesses and individuals in a range of different scenarios.

Taxation is one of the applied skills subjects within ACCA, and the skills learned here will underpin the later Strategic Professional subject Advanced Taxation (if you choose it). Therefore it’s essential to build a strong foundation of knowledge while studying for the TX course.

TX Exam Format

The Applied Skills papers follow the same format. They are all assessed by Computer Based Exams (CBEs), and you have a total time of three hours to complete the exam, after up to 10 minutes of reading the CBE instructions. Like all other exams in the ACCA qualification, the pass mark is 50%.

The FTX exam consists of three sections with all compulsory questions. The breakdown of these is as follows:

• Section A comprises 15 Objective Test (OT) questions worth 2 marks each, for a total of 30 marks. These can come from any syllabus area.
• Section B contains 3 OT Case Scenarios, each with 5 questions worth 2 marks each, again for a total of 30 marks. Once again, these can come from any syllabus area.

This means that 60% of the paper can come from any topic on the syllabus, so failing to cover the full course could prove very costly in the exam. Think about it, if you don’t cover a topic that comes up as 5 different questions in an OT Case Scenario, you risk losing 10 marks already – not the start you want for the exam!

Section C is the Constructed Response section and includes one 10 mark question and two 15 mark questions. These questions involve a mix of calculations, explanations and discussion and will generally require an application to a scenario.

Syllabus Guide

As touched upon previously, the Taxation syllabus aims to develop knowledge and skills relating to the tax system and be able to apply these to individuals, single companies, and groups of companies.

In order to achieve this goal, the ACCA outline 6 main capabilities that candidates should be able to do upon completion of this exam:

1. Explain the tax system’s operation and scope, the obligations of taxpayers and/or their agents, and the implications of non-compliance.
2. Explain and compute the income tax liabilities of individuals and the effect of national insurance contributions (NIC) on employees, employers and the self-employed.
3. Explain and compute the chargeable gains arising from individuals.
4.  Explain and compute the inheritance tax liabilities of individuals.
5.  Explain and compute the corporation tax liabilities of individual companies and groups of companies.
6.  Explain and compute the effects of value-added tax on incorporated and unincorporated businesses.

Here’s the relational diagram showing how those areas tie together:

Download the complete Taxation study and syllabus guide from ACCA Global to review in-depth.

You might also want to read ACCA’s bank of technical articles addressing syllabus areas for Taxation.

Taxation Exam Study Tips

1. Give yourself 12 weeks to prepare

At the Applied Skill level, the exams require a deeper understanding of the content to enable you to tailor your knowledge to different scenarios. This requires not just a good grasp of the theory but also a huge amount of question practice to develop your application skills. Therefore we recommend using a complete 12-week study cycle to prepare for this.

This allows you to follow our recommended study plan, which includes 8 weeks of reviewing the content and learning through question walkthroughs, enabling you to get through the entire syllabus as noted above; and 4 weeks of our exam technique phase, which focuses on the exam and question practice through our mock exams, exam preparations resources, webinars and Revision Bootcamp. Having this structured study in place will give you both a strong foundation of knowledge and good exam technique to provide you with the best chance of passing the paper.

2. Cover the entire syllabus

The examiner indicates that the two 15 mark constructed response questions will be based on income tax and corporation tax, so you should make sure you are particularly strong in these areas. These can also feature in the OT questions as well.

However, income tax and corporation tax alone won’t get you the pass, as the exam is all compulsory questions, and sections A and B, as well as the 10 mark question section C, can come from any area of the syllabus; therefore, having broad knowledge is essential to success. So to give yourself the best chance, you need to practice questions from the full range of different topic areas, as this will provide you with the most robust foundation of knowledge to tackle whatever exam you are faced with on the day.

3. Don’t ignore the OTs

As we said above, the OT’s are worth 60% of this paper, so it’s impossible to pass unless you can score good marks in this area. This style of questions requires a good understanding of the content and lots of practice questions. Fortunately, we have practice questions for each topic after the videos where you can test your understanding. Even when you are practising longer form questions, make sure you understand the technical elements of the solution, as these could make for potential OT questions.

Remember to always read the requirements of the OTs carefully and consider the format your answer needs to be in, particularly when calculations are involved. Also, try practising OT questions and Cases under time pressure to replicate the exam experience.

4. Practice makes perfect

There is no escaping the fact that the only way you will grasp new concepts of the TX syllabus is through question practice. Therefore this should be the cornerstone of your study – practice, practice, practice. It’s the only way you will understand the underlying principles and technical areas of the different taxes and be able to apply them using the key information in the scenario.

Tax computations often follow a pro-forma template, so if you can understand and master this, it will make approaching calculations easier. Good structure and layout will make it easier for the marker to see how a figure from the workings fits into main calculations. Furthermore, always consider other information you need to give alongside the company, such as deadlines for payments or penalties for late charges, possible exemptions or reliefs that could be utilised, or any other planning considerations.

Don’t get disheartened if this is difficult at the start – remember, you learn more from your failures than your successes, so even if you struggled with a question, review the solution, go back and review the content as needed, and then try that questions again to see if you’ve made sense of what was required. If you can keep working through questions in that manner, you will start to develop an excellent understanding of both the content and how it is examined.

5. Become a learnsignal member

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You can become a member by signing up for a monthly, quarterly or yearly plan to access everything you need to pass ACCA Taxation and every other exam. We cover the entire syllabus in comprehensive depth but in bite-size, specially-designed materials structured in the optimum way to help you pass. And we know that because we have a whole team of global ACCA experts and accountants behind us, including professional examiners.

Find out what you get with learnsignal membership in this article.

Taxation Exam Technique

1. Practice time management

The exam is all compulsory questions; therefore, planning for the paper as a whole is vital, and you need a time management system in place throughout. With a 3 hour paper, you have 180 minutes to complete the 100 mark paper – so you should spend 1.8 minutes for every mark. You should apply this system to every question you work on, including the OTs, and break down longer questions by the marks available for each requirement.

This will ensure you spend a proportionate time on a question relative to its value. Doing this ensures you don’t leave behind the easy marks in each question and can make a good attempt at all questions before your time is up.

2. Read the requirements carefully before jumping into your answer

The most essential step in planning your answer is reading the requirement carefully and understanding precisely what is being asked. Take your time thinking about an approach and solution, then re-read the requirement to reinforce that your planned answer hit’s all the key points.

Often you will need to perform the tax calculation before you can get to the discursive elements. If you start writing too quickly or before you have done the necessary calculations, you may miss key points and marks, so take time to ensure that you understand the question’s context and apply the correct knowledge. Remember, always answer the question asked. Then from a time management perspective for each individual question, split out what is required in each requirement and plan your time accordingly.

3. Good layout and structure will help the marks roll in

Ensuring that you maintain a concise and professional structure to your answer will make your points clear to the examiner. To do this, you must be organised and have a systematic approach to answering the question. Consider the proforma of specific tax calculations to ensure you are not missing anything. You should have built this skillset up during your question practice leading up to the exam.

Planning will enable you to produce logical, well-thought-out, and organised answers that hit all the key points. When performing calculations, try to make them easy for the examiner, and include headings and explanations as needed. To do this, you need to be comfortable using the CBE tool, so you should practice as much as possible using the CBE practice area on the learnsignal website and attempt learnsignal’s CBE Mocks. The more comfortable you are with the word processor and spreadsheet, the better your answer will appear to the examiner.

4. Make sure you are applying your knowledge to the scenario

The key to this exam is knowing how to explain tax rules and calculations, not just how to perform them. Also, it’s essential to consider the scenario given and tax circumstances relevant to the individual or company in the scenario, as this can impact the calculation and discussion elements.

The sentences you write should remain on topic and add value to your answer – don’t waste time trying to provide additional information to show off your knowledge that is not related to the scenario or requirement. Furthermore, the examiner is not looking for generic statements; they are interested in seeing how you can use your tax knowledge from the syllabus to identify the key information relevant to answering the question.

What the Examiners Say

To finish, let’s look at some points from the person who you need to please the most on the day of the exam – the examiner!

Some key points which they identified were:

“Read the requirement and all case information very carefully. This goes for the whole exam, but any OT question is ‘all or nothing,’ so it is important not to miss key details in a scenario. Cover the whole syllabus in your revision. TX has a large syllabus which can be daunting. However, it is important to be prepared to answer questions on all areas of the syllabus and be able to apply your knowledge in a given scenario.”

If you can avoid the common mistakes and take on board the advice given in this blog, you’ll have a really good chance of passing your Taxation exam! You can watch our tutor exam report debrief video for more key points raised by the examiner.