ACCA Advanced Taxation (ATX) Practice Exam

What is needed for individuals to benefit from the standard Personal Allowance?

1. No income above prescribed limits

2. Residency in the UK for a full tax year

3. A claim made by the taxpayer

4. The use of the arising basis

The correct answer is: Residency in the UK for a full tax year

To benefit from the standard Personal Allowance, residency in the UK for a full tax year is essential. The Personal Allowance is a tax-free amount that individuals can earn before they start paying income tax, and eligibility for this allowance is primarily determined by a taxpayer's residency status. A person must be classified as a resident for tax purposes in the UK, which typically requires them to be physically present in the country for a sufficient number of days throughout the tax year. This residency ensures that the individual is generally subject to UK tax laws and can, therefore, claim the Personal Allowance that applies. Other options, while relevant in the context of taxation, do not serve as foundational requirements for the entitlement to the Personal Allowance. For instance, merely having income below prescribed limits or the requirement of making a claim does not necessarily determine eligibility; rather, the residency status is the primary condition that establishes a taxpayer's right to benefit from the allowance during that specific tax year. Similarly, while the use of the arising basis could relate to the timing of income recognition for tax purposes, it doesn't directly influence the ability to receive the Personal Allowance.