Lesson 7.1.1.1

7.1.1.1 Taxation Quiz: NCFE Business & Enterprise, Unit 7

20 questions · by Revision Ninja

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This free Taxation quiz has 20 multiple choice questions for the NCFE Level 1/2 Technical Award in Business and Enterprise (NCFE Business & Enterprise), Unit 7: External Environment. It covers lesson 7.1.1.1, Taxation, one of the ready-made revision sets written with Revision Ninja and organised by unit on Qwiz Rush.

Use it as a starter, a plenary or an end-of-unit check: host it live on the board and students join with a game code on their own devices — no student accounts and nothing to install — or set it for independent revision with Free Play, where each student works through the questions alone.

Every question runs on a 20-second countdown and the fastest correct answers score the most. All the questions and their choices are listed below so you can see what the quiz covers; the answers are revealed in the game. Want to change something? Make your own copy and edit it in your library.

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The 20 questions

  1. Corporation tax rates rise. What is the most likely effect on a limited company's retained profit?

    • Gross profit margin falls
    • Its VAT bill to HMRC increases
    • Less profit is left to reinvest
    • Retained profit is unaffected

  2. Income tax rates rise. What is the most likely effect on how much households can spend?

    • Shop prices rise immediately
    • Demand for luxury goods rises
    • Disposable income falls
    • Saving out of income rises

  3. Which of these pays corporation tax to HMRC on its profits?

    • A partnership of two vets
    • A self-employed plumber
    • A private limited company
    • A freelance web developer

  4. Corporation tax is cut. Why might a plc then be able to pay bigger dividends?

    • VAT on its products has fallen
    • Its share price rises automatically
    • More profit is left after tax
    • Its operating costs have fallen

  5. The government cuts the standard rate of VAT. What is the most likely effect on consumer demand?

    • Luxury goods become VAT exempt
    • Households save rather than spend
    • Firms raise prices to cover VAT
    • Shop prices fall, so sales rise

  6. A sole trader makes £30,000 profit in a year from her hairdressing salon. Which tax is charged on that £30,000?

    • Income Tax
    • Value Added Tax
    • Corporation Tax
    • Business Rates

  7. Corporation tax is cut. How does this most directly help a company fund research and development?

    • More post-tax profit to reinvest
    • Lower interest rates on loans
    • A cash grant paid by the government
    • Lower wage costs for its engineers

  8. VAT rises from 20% to 22%. What is the most likely effect on a shop selling standard-rated goods?

    • Customers pay a higher shelf price
    • Its business rates bill goes up
    • Its gross profit margin will rise
    • Its supplier absorbs the extra tax

  9. The government cuts the basic rate of income tax. How does this affect most employees?

    • They take home more pay each month
    • They pay less VAT on their shopping
    • Their gross wage is increased by HMRC
    • Their employer's wage costs rise

  10. A shop sells 10 units at £10 each before VAT. VAT is charged at 20%. What total does the customer pay?

    • £102
    • £100
    • £120
    • £83.33

  11. What is the main purpose of Value Added Tax (VAT) in the UK?

    • To tax the profits made by limited companies
    • To tax goods brought in from other countries
    • To tax the wages, salaries and bonuses workers earn
    • To raise government revenue by taxing spending

  12. Which of these goods has no VAT added to its price in the UK?

    • Restaurant meals
    • Adult footwear
    • Children's clothing
    • Electrical appliances

  13. The standard rate of VAT is raised. What is the most likely effect on consumer spending?

    • It is unchanged, because businesses pay the VAT
    • It is likely to fall, because shop prices rise
    • It is likely to rise, because wages rise with prices
    • It is unchanged, because VAT is a fixed fee

  14. A small firm's taxable turnover rises above the VAT registration threshold. What must it now do?

    • Register for VAT and add VAT to its sales
    • Switch from paying Income Tax to Corporation Tax
    • Absorb the VAT itself out of its profit margin
    • Reclaim VAT but not charge it to customers

  15. Priya runs a hair salon as a sole trader. Which tax does she pay on what the business earns?

    • Capital Gains Tax, charged on any gain the salon makes
    • Value Added Tax, paid on yearly earnings
    • Corporation Tax, as the business is a separate legal body
    • Income Tax, paid via a Self Assessment return

  16. Income Tax rates rise. What is the most likely effect on a shop selling luxury watches?

    • Sales hold up, as VAT is unchanged so prices are the same
    • Sales fall, as customers have less to spend
    • Sales rise, as shoppers cut back on saving
    • Costs rise, as the firm pays the extra tax

  17. In a recession, why might the government cut the standard rate of VAT?

    • To slow down spending and cool inflation
    • To lower prices and encourage people to spend
    • To make imported goods dearer than UK goods
    • To raise more tax revenue for public services

  18. Since April 2023, what is the main rate of UK Corporation Tax on profits over £250,000?

    • 30%
    • 20%
    • 19%
    • 25%

  19. A company makes a trading loss this year. What can it usually do for Corporation Tax purposes?

    • Carry the loss forward to cut tax on future profits
    • Claim the loss back in cash from HMRC in full
    • Add the loss to next year's VAT return instead
    • Ignore it, as Corporation Tax is charged on sales

  20. Corporation Tax is cut. How is this most likely to affect a plc's shareholders?

    • Nothing changes, as tax is paid by customers
    • More profit remains, so dividends may rise
    • Dividends fall, as the tax is taken from them
    • Shareholders pay the Corporation Tax themselves