DipFA · 3 timed mocks
AFAT2 — Taxation — Unit 2
The application half of AFAT: CGT, IHT, trusts, pension tax and wrapping investments. Same 45-minute, 30-mark format. Suitability questions expect you to pick the tax-efficient option for this client, not the theoretically cheapest.
- Questions
- 30
- Minutes
- 45
- Pass (70%)
- 21/30
What AFAT2 covers
- •CGT: £3,000 annual exempt amount, 18%/24% rates, BADR at 18% from April 2026
- •IHT: NRB £325,000, RNRB £175,000, PETs, CLTs, taper relief and the spouse exemption
- •Trusts: interest in possession vs discretionary; 20% lifetime rate on CLTs
- •Pension tax: annual allowance £60,000, MPAA £10,000, tapered AA
- •ISAs, EIS, SEIS, VCT and investment bonds (top-slicing, 5% withdrawals)
- •Matching wrappers to a client's rate of tax and time horizon
3 free AFAT2 practice questions
Straight from Mock Paper 1, in the real exam style — no sign-up, no paywall.
Q1.The CGT annual exempt amount for individuals in 2026/27 is:
- A£1,000
- B£3,000
- C£6,000
- D£12,300
Reveal the answer
B is correct. £3,000 is the 2026/27 CGT annual exempt amount. £6,000 and £12,300 are older figures. £1,000 is too low.
Q2.For 2026/27, basic-rate taxpayers generally pay CGT at what rate on most residential property gains?
- A10%
- B18%
- C20%
- D24%
Reveal the answer
B is correct. Residential property: 18% basic / 24% higher. 10%/20% are general asset rates for non-residential. 24% is higher-rate residential.
Q3.From 6 April 2026, Business Asset Disposal Relief (BADR) is charged at:
- A10%
- B18%
- C20%
- D24%
Reveal the answer
B is correct. BADR rate is 18% from April 2026. 10% was the old rate. 20%/24% are standard rates.
How to pass AFAT2
- ✓IHT PETs are potentially exempt — they are not immediately chargeable. CLTs are.
- ✓RNRB needs a qualifying residence going to direct descendants; it tapers from £2m.
- ✓Top-slicing is an exam favourite: chargeable gain on a bond, divided by complete years.
AFAT2 exam — common questions
What does the AFAT2 exam cover?
AFAT2 covers cgt, iht, trusts, pension tax and more. In full: CGT: £3,000 annual exempt amount, 18%/24% rates, BADR at 18% from April 2026; IHT: NRB £325,000, RNRB £175,000, PETs, CLTs, taper relief and the spouse exemption; Trusts: interest in possession vs discretionary; 20% lifetime rate on CLTs; Pension tax: annual allowance £60,000, MPAA £10,000, tapered AA; ISAs, EIS, SEIS, VCT and investment bonds (top-slicing, 5% withdrawals); Matching wrappers to a client's rate of tax and time horizon.
How long is the AFAT2 exam?
45 minutes. Our AFAT2 mock papers run to the same clock, so you practise at exam pace rather than at your own.
What is the pass mark for AFAT2?
70% — 21 out of 30 marks. You have to clear 70% in each unit independently; there is no compensation between units.
How many questions are in the AFAT2 exam?
30 questions — 20 standalone questions + 2 case studies × 5 linked questions, worth 30 marks in total.
Is AFAT2 part of DipFA or CeMAP?
AFAT2 is a DipFA Applied Financial Advice unit. It is not part of CeMAP.