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ACA Certificate Quick Reference: Business Insight, Law and Tax

Formulae, legal rules and 2026/27 tax figures for the business insight, business law and tax modules at ICAEW ACA Certificate Level. Study material written for practice, not the official exam.

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Contribution and breakeven
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1
Contribution and breakeven
Contribution per unit = selling price - variable cost. Breakeven units = fixed costs / contribution per unit.
2
Margin of safety
Actual (or budgeted) sales less breakeven sales, often shown as a percentage of actual sales.
3
Limiting factor rule
Rank products by contribution per unit of the scarce resource and make the highest first, up to demand.
4
Net present value rule
Accept a project if the present value of its cash inflows, discounted at the cost of capital, exceeds the cost, so that NPV is positive.
5
Payback weakness
Ignores the time value of money and any cash flows after the payback date.
6
Accounting rate of return
Average annual accounting profit / average investment (or initial investment, if stated).
7
Overhead absorption rate
Budgeted overheads / budgeted activity, such as labour hours. Over- or under-absorbed = absorbed overhead v actual overhead.
8
Marginal v absorption profit
If production exceeds sales, absorption costing profit is higher by the fixed overhead per unit multiplied by the increase in inventory.
9
Material variances
Price = (actual price - standard price) × actual quantity. Usage = (actual quantity - standard quantity) × standard price.
10
Labour variances
Rate = (actual rate - standard rate) × actual hours. Efficiency = (actual hours - standard hours) × standard rate.
11
Cash operating cycle
Inventory days + receivables days - payables days.
12
Price elasticity of demand
% change in quantity demanded / % change in price. A size above 1 is elastic, so a price rise reduces revenue.
13
High-low method
Variable cost per unit = change in cost / change in activity. Fixed cost = total cost - variable cost × activity.
14
Salomon v Salomon
A properly incorporated company is a separate legal person from its members.
15
Caparo v Dickman
Auditors owe a duty of care to the company and its members as a body, not to individual investors relying on the accounts.
16
Invitation to treat
A shop display or advertisement invites offers; the customer makes the offer and the seller accepts it.
17
Consideration
Something of value given in return for a promise. Past consideration is not good consideration.
18
Condition v warranty
Breach of a condition allows termination and damages. Breach of a warranty allows damages only.
19
Ordinary and special resolutions
Ordinary: simple majority of votes cast. Special: at least 75% of votes cast.
20
Removal of a director
Ordinary resolution at a general meeting after special notice (Companies Act 2006, section 168).
21
Fixed v floating charge
A fixed charge attaches to specific assets such as land. A floating charge covers a changing pool such as inventory until it crystallises.
22
Liquidation order of payment
Fixed charge holders, then liquidation costs, preferential creditors, floating charge holders and unsecured creditors, with shareholders last.
23
Whistleblowing law
The Public Interest Disclosure Act 1998 protects workers who make protected disclosures from dismissal and detriment.
24
Tax avoidance v evasion
Avoidance reduces tax within the law. Evasion deliberately conceals or misreports information and is illegal.
25
Income tax 2026/27 (England)
Personal allowance £12,570; basic rate 20% on the first £37,700 of taxable income; higher rate 40% above that; additional rate 45% on income above £125,140.
26
Personal allowance taper
The personal allowance falls by £1 for every £2 of income above £100,000.
27
Class 1 NIC 2026/27
Employee: 8% between £12,570 and £50,270, 2% above. Employer: 15% above the £5,000 secondary threshold.
28
Corporation tax rates (FY2026)
Main rate 25%; small profits rate 19% below £50,000; marginal relief between £50,000 and £250,000 using the fraction 3/200.
29
Capital gains tax 2026/27
Annual exempt amount £3,000; 18% within the basic rate band and 24% above it for most gains. Business Asset Disposal Relief is taxed at 18%.
30
Inheritance tax thresholds
Nil rate band £325,000 and residence nil rate band up to £175,000; rate 40%. Unused bands of a deceased spouse can be transferred.
31
VAT registration
Register if taxable turnover over the last 12 months exceeds £90,000, within 30 days of the end of the month the limit is exceeded.
32
Self Assessment dates
Online return and balancing payment due 31 January after the tax year. Payments on account due 31 January and 31 July.
33
Corporation tax payment date
Nine months and one day after the end of the accounting period, for companies not paying by instalments.

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