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Business Planning: Taxation

In the Business Planning: Taxation exam, you will apply technical knowledge and professional skills to identify and resolve taxation issues that arise in the context of preparing tax computations and to advise on tax-efficient strategies for businesses and individuals. The exam is 2.5 hours and will consist of three questions covering a range of taxes as well as tax planning. The exam is available in March, June, September, and December. You have a maximum of four attempts at this exam.

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Important information for exams 2024

Following the Chancellor’s announcements relating to Class 1 primary National Insurance Contributions in the Autumn Statement (23 November 2023), we can update you as follows in relation to learning materials and the approach for ICAEW Tax exams during 2024.

All students will be expected to answer exam questions based on the information in the 2024 learning materials.

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Webinar: Introduction to the Business Planning: Taxation exam

Introduction to the business planning: taxation exam, tips for success, retaking the business planning: taxation exam.

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Jag's Journey

Sharing my life experiences including the Associate Chartered Accountant (ACA) qualification

How to Pass the “Hardest ACA Exam” BPT: Including Open Book File Made Easy

If you are reading this, you are likely to either be at the dreaded moment where your Business Planning: Taxation (BPT) exam is approaching or you are intrigued about the ACA myth itself. Before you read on, just know that I have been in your position in 2019. It is an unsettling time and initially BPT probably is the most overwhelming ACA exam. That being said I do/did not rate BPT as the hardest ACA exam in the end. I went from 44 in a mock exam (the only one I failed) to achieving 81 in the real exam #notbraggingbutmadeitgreen . I hope this article gives you the confidence you need to pass BPT and I will share what worked for me!

Fun fact: BPT used to be an Advanced Level exam which means you are almost there at this point. Hang in there.

Table of Contents

What is the bpt exam actually like, mastering the skill, approach: should i spend a lot of time recapping tc and learning the content for bpt, bpt summary notes, icaew bpt question bank, model answers, sticky tabs and icaew bookshelf, bpt question reference sheet, walkthrough of my open book, nail your timing of the bpt exam.

I have already provided a breakdown of this exam but I will provide a short recap if you need it. BPT stands for Business Planning: Taxation. Yes, a tax exam. Tax Compliance is the exam where you need to perform the tax calculations itself. BPT however has a different angle. There is much more, wider tax content involved and you are instead required to provide tax advice . You are required to talk through taxes rather than performing the calculations itself although a small degree of this could be asked for.

This 2.5 hour open book exam is extremely, extreeeeemely time pressured but the content is quite consistent in terms of the syllabus areas. It will cover taxation of corporate entities, owner managed businesses and personal taxation. However, each syllabus area has so many different possible combinations of tax laws, topics and scenarios that each exam can be completely different. It also requires a vast amount of application but this does not mean you cannot pick up easy marks.

Easy Marks in BPT?!

Before I get into the more complicated areas and risk you feeling overwhelmed, let’s get you feeling positive . As hard as the exam is rumoured to be and can be, BPT does still have some easy marks available!

A big part of the exam is mastering the skill of identifying the relevant tax rule to the scenario in question. Once you can do this, you can really pick up some easy marks here. By stating the basics of the tax rule you spot applies to the question, with a good open book file which we will come to, you will pick up at least a few marks for each. This is why it is important to get through the whole exam . Spending longer getting deeper into a tax concept will hinder your success if it means you are missing the easy initial marks elsewhere.

At this point you may be thinking, “but Jag, how is that easy when you need to master the skill?” . This is a very good point. Try not to roll your eyes when I say this but the only way to master this skill and to get those easy marks is through practise . These marks are only easy if you put in the work. I kid you not, I went through all 60 ICAEW question bank questions in detail. It took me a very long time to master this skill and this happened after the mock but before the exam, hence my drastic mark increase in the real exam.

Note : If you have read my previous blog , you will know I did take some time off before the exam which is why this was achievable for me. Do not get disheartened if you do not have enough time to do this and it is not necessary to pass. Do as much revision and question practise as you can without burning out!

Do not get me wrong, I did not master this skill entirely of course as there is just way too much content and sneakiness in the exam. It does get easier though. When I first started practising, I was probably picking up about 20% of the relevant taxes in the question. I’d read the answer after a rubbish attempt and be shocked at everything I completely missed. Fast forward to the exam stage after all my question practise I would say this was around 75-85% . Remember, there are actually more marks available for the BPT questions than the maximum number of marks (cha-ching) . Go easy on yourself, you do not need to know it all!

It is not all bad, wishy-washy “just practise” news – I do have some treasure to give you…

Ethics. As an ACA student, you should know by the BPT stage that every exam after Certificate Level will have ethics marks up for grabs. In BPT there are around 5-10% ethics marks . You should aim on maxing out these marks. Ethics is not always simple but you can use your open book to help you on this. Write down all the different ethical scenarios such as tax evasion, avoidance, money laundering and so on. Then match the model answers from the ICAEW question bank to each topic as you go along. You will then have an ethics answer reference guide . All you need to do is ensure you APPLY it to the exam scenario. BPT is all about application.

If you can choose, I would advise sitting BPT after TC . It is however possible to sit/pass BPT first (a girl in my class did). Recap the content from tax compliance (TC) if you have sat this exam prior to BPT but you really do not need to go overboard here. As stated above, BPT focuses much more on tax advice rather than the calculations itself. It is good to have a good understanding of how to do the calculations such as income tax, CGT, etc but you do not need to go overboard nailing the calculations and all the little details. You have already proved/will prove you can do this in TC.

Disclaimer : this is my own personal opinion based on how I approached the exam. I have read around 60% of the marks in the BPT exam are for technical matters already tested in the TC exam . This does not mean you need to do perform 60% of the calculations, although there may be a few. It means you need the understanding to advise which is why you arguably do need to recap the content thoroughly before attempting questions.

My approach was to throw myself into BPT question practise and learn/recap from there. This was usually my approach with the majority of ACA exams. It is up to you which method you prefer but if you do throw yourself in, your debriefs of the answers need to be thorough . This enabled me to identify any weak areas . I would then learn/recap the content so I could get better at is as I went along.

I did take my TC question bank in the exam with me as a comfort blanket . I thought I could find a model answer for a calculation I needed to talk through or show a small part of. However, I did not end up finding it and had to move on . Had I followed my own advice, I would have just missed out the extra hard marks to get the easier ones later on. In reality, I actually did not get to answer all aspects of one of the questions and had to miss marks out. Luckily, it was only a few marks in the end so I was fine but I was worried though.

In terms of the new  BPT content , I would say it is important to have a decent understanding of the new concepts to begin with. However, remember this is a completely open book exam so do not think you need to nail the content first thing. Your understanding will develop as you come to practise the questions . Again, you can spend time learning the content first but practise is key as so much application is required. That being said, I do know someone who did not do too much question practise but still passed. I would say this is very risky though because of how much BPT is a skills based application exam.

Let’s now get to the good stuff, the open book…

Preparing the Open Book File for BPT

Before I start explaining what worked for me , I should highlight the fact that I am aware that ICAEW materials are now digital . This does make it harder to some extent to have the same approach I will outline below. However, it is still feasible and I will add in pointers to help make this doable.

Preparing an open book can be very overwhelming . Tutors would talk about this amazing open book that would have all the answers but did not really go on to reveal any details for how to go about it. Everyone’s approach can be different and so when it came to it, I honestly had no idea where to start. I can now say that a good starting point would be by trying not to reinvent the wheel .

If you are studying with Kaplan / BPP they should provide you with a workbook and summary notes . If not/additionally, ask people at your place of work if they have any good summary notes too as chances are they could do. I did this and these are the notes I used and will show below. Be careful though as tax rules and bands can change from year to year so if you do use other summary notes make sure you update them accordingly. You can also buy these but I do not think this is necessary.

Summary notes are good to use as the basis of the open book file. These would outline the basic knowledge/concepts and then from there you can add key points to it and really build onto it. The building really came along as I did question bank practise and when doing a thorough debrief of the answers . To have a solid open book, you should definitely incorporate the ICAEW BPT Question Bank to know where the marks are.

As stated in “ 5 best ways to Minimise Exam Stress “, I would work backwards from the exam date , plan how many questions I needed to do (60 – leaving some for college) and then pencil these in for specific dates. This worked out to be by practising around one ICAEW Question Bank question a day. In hindsight, what would have worked well is by practising questions with the same key topics on consecutive days . The ICAEW BPT Question Bank should have a contents table at the front to help with this. However, I feel I just planned the questions randomly and it was still fine.

Using my throwing myself in approach, initially with the first 10-15 questions I was really out of my depth . I wouldn’t even actually spend that long attempting the question because I knew I would struggle even with my notes. I would write down the few taxes I could spot that were relevant. This is where having good content knowledge from the onset could help. However, where I really then built up my content knowledge was by spending up to an hour debriefing the model answer. Of course you are never expected to pick up everything but this is where I really started to work on mastering the skill of identifying relevant taxes to the questions.

When going through the answer to a practise question, this is where I would start tying answers into my summary notes and building the file. I would find the relevant section in the summary notes and write down the question reference to have it as a good example to look back to. For example, a small “QB56” above the Seed Enterprise Investment Scheme (SEIS) summary notes. I would then also write down any key parts of the answer that are generic and could be applied to other questions such as good introductions or general things to say.

As time went on, as I had started building the open book file up my confidence began to grow. My content knowledge was getting to where it needed to be so I did not need to completely rely on my notes and I was slowly mastering the skill with time. Once you get to this point, and you WILL get to this point, you will find BPT really isn’t THAT bad. This point for me did come quite close to the exam date but I still got there. The real issue with this exam is timing . You should definitely start practising questions to time as early as you can. I will help you with this further below.

When it came closer to the BPT exam and I had gone through most of the questions (leaving a few unseen for last minute testing), I was now familiar with the most popular topics . I would then write up generic answer sheets for these topics such as residency status, sole trader vs company, etc and have references to the best model answers in the ICAEW Question Bank for these topics too. This meant that if these topics came up in the exam I could start writing straight away but making sure to APPLY THE GENERIC ANSWERS TO THE SCENARIO IN THE EXAM . Application is key in BPT!!  

Fortunately for me, I had a great BPT tutor who also sent out model answer sheets for certain topics that would mean I could quickly pick up the easy marks. For example, a ready to go answer for smaller areas such as SEIS. Remember, these marks are only easy if you have mastered the skill to pick these out.

I lived for sticky tabs for this exam! Timing is the biggest struggle with BPT and so to really help cut out time , sticky tabs were key. I would tie the summary notes and the ICAEW Question Bank together with sticky tabs so it was easy to quickly flick to the relevant parts if this came up in the real exam. I did this as I went along because doing this all at the end would have been very long. I know this is where it gets tricky for the Digital Bookshelf as the ICAEW Question Bank is virtual. However, it will still work well for your summary notes.

My approach was to put sticky notes on my summary note pages where I wanted to flag key topics . I did not need to flag everything because with all this practise over time I knew where to look for some. For example, I may not have put a sticky tab for ‘patent box’ but I would know it came straight after ‘IHT’ that was tabbed. I would then use the same colour tab , in the same position along the side for the ICAEW BPT Question Bank answer. On this tab I would write “QB56” for example to flag where the model answer is. I would also annotate on the answer page to make the reference extra clear.

For the digital bookshelf, like I said you can still do this for your summary notes. You will at least be able to access the topics quickly to then find the relevant question online. I do think this could be much more time consuming though.

Here are ways to get around this :

• Use a BPT question reference sheet , as outlined below. The Question Bank will be built into the exam software and students who have used it recently have stated you can search page numbers. Instead of noting down the QB question, write down the page number
• Some students are getting hardcopy ICAEW BPT Question Banks from other students who had them. Although this may work initially, this is perhaps not a good idea as the content, questions and tax rates update. If you do get it early enough to make all the updates needed then this could work well
• Print out the best model answers you think you will need in the exam so you do not have to flick to the ICAEW Bookshelf
• Avoid overreliance on the ICAEW Question Bank for answers to exam questions. Make sure you know which topics it could be very helpful for. Otherwise, have good annotated summary notes, model answer sheets and your brain for the rest!
• Practise makes perfect – start using the ICAEW Bookshelf from very early on (this goes for the ICAEW exam software too) so you are comfortable with it

As you can tell, I had put in a lot of work to build up my open book file over time. Just because this is what worked for me it does not mean the same approach suits you. You may find you would rather spend more time learning the content initially and start off in a stronger position when first attempting any ICAEW Question Bank questions. It really is up to you how you do this.

I would also like to share another approach I have heard of which seemed to work for others. This is where they would create a table with a list of all the different BPT exam topics . They would then write a reference to the best model answers from the ICAEW Question Bank. In a way this cuts out my step of having to go to the summary notes or to my own model answers first to find the reference. You could actually do both as I did for ethics . It is also likely someone else has produced this reference sheet so ask around and see!

Another open book you are provided with for this exam is the tax tables for the year of your exam. I will keep this very brief as I did not really use these much . This is because all of the relevant rates and details would have been included in the summary notes. It is better to have all details in one place rather than wasting time flicking between different sheets if you can. I did still take this into the exam with me; I actually took in my tabbed up TC version as I sat both in 2019. However, I did not look at this at all in the exam.

As stated above, I took the following materials into my BPT exam:

• My annotated and tabbed BPT summary notes
• ICAEW Question Bank also annotated and tabbed
• My model answers including those sheets provided by my BPT tutor
• Kaplan Integrated Workbook just in case
• Tax tables just in case
• TC ICAEW Question Bank (wasted time)

You may be wondering why I have not mentioned the ICAEW BPT Study Manual . I have not mentioned this because I literally did not look at this at all. In all honesty, I can’t say I have used this for any of the ACA exams as it is way too detailed.

To give you a complete picture of what my open book was like, I have included photos below. You can see how the sticky tabs were used. Remember, these summary notes were sent to me by someone at my firm so you will not recognise these.

For those of you who have joined my journey, I will shortly be sending out a few of the model answers I created and took in to hopefully help you give you some inspiration. If you have not yet joined my journey, join now and you can still get these!

Hopefully you now have a better idea of how to approach studying for the BPT exam and an idea for how you could put together an open book file. Now we need to come onto an extremely important downfall for students sitting BPT, which is timing. This is said to be the most common reason why students fail this exam. Messing up your timing for this exam really does put you in danger as remember, the easy marks are at the initial parts of the question. You therefore need to get there to get these!

As if BPT isn’t complicated enough, you also have to allocate the marks for the exam yourself. You only get told the total marks for the three BPT exam questions, even though these breakdown into much smaller parts. A good idea would therefore be to plan your timing . Take no more than a couple of minutes to allocate marks between each sub-question. As there are 1.5 minutes per mark in this exam, you can calculate how much time you should be spending on each question. See below:

You will not always get this spot on but practising does help you get better at this. Looking carefully at the wording can help here. “Explain with calculations” is of course going to rack up more marks than “describe”. Additionally, you should know the ethics marks will be a maximum of 10% , usually 7 marks, so do not allocate too much time here.

I cannot stress how important timing is. When I first started this exam, it was as if my hands had froze up and I could not type as quickly as I usually could. Given it was already a time pressured exam, this really was not ideal at all. Therefore, by being strict with timing and moving onto the next question when needed really did help me get through.

That’s a wrap – I again would like to state that this blog outlines what worked for me . Hopefully this blog has helped give you an insight into the BPT exam, an idea for how to approach the exam as well as preparing the open book file. It is by no means the “right way”.

Additionally, please do not be alarmed or overwhelmed by how much preparation I did. I have always had the mentality that I need to get through every ICAEW Question Bank for most of the ACA exams. This was my attitude for BPT and is what I did. In all honestly, I probably did not need to put in as much work to pass BPT but I aimed to do as well as I could.

Remember, there is a reason most students rank this as the “hardest ACA exam”. Do not be hard on yourself if you do struggle as most students do. If you need any help or further support from other students, feel free to join this ACA LinkedIn group . You can also post your thoughts and comments below.

21 comments

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Hey, so i am sitting BPT with BST in 3weeks time (roughly have 3weeks of leave (study+annual leave from Monday). I am planning on smashing out around 80% of the QB out (that is 80% of the 59 questions on the QB) and do it roughly 3times – so do each questions or alteast attempt to complete each question 3times around (I follow the same advice I was given for certificates level exams where our tutor told us to do the QB for each exam at least twice. I just do it more 1round for my own self-assurance).

As a BPT is such a skill-based exam (so, like not similar to FAR or FM where the format of the question would be pretty similar but you just need to do know the technical knowledge), do you think its better to do 3rounds but only complete around 80% of the paper or try and do every single ques on the QB?

Also for BST, how many question did you actually attempt to complete or would advice any one sitting it with BPT to complete?

Side note: Your blog is very nice to read as the experience you have wrote about is very similar to what i currently experiences. Would love to know/read more of your experience of how you find working at the BIG4 as an AM and before, as a senior (I am going to be a senior at the Big4 in Sept and contemplating on whether its really worth sticking to Audit and move up the chain or switch to something else).

The first thing I would say on this is that doing the QB three times for Professional Level, especially BPT is likely to be more counter-productive. With Certificate Level, this advice is much more appropriate given how short the questions are and how quickly you can get through them. Professional Level exams require much more time to get through each questions. For example, for BPT to get through even a shorter question could still take up to two hours to practice, mark and debrief. You also need to factor in the time to really build on your open book file from this.

I would therefore definitely not advise trying to go through the QB three times for this. This will avoid: 1) burnout 2) ineffectiveness

Getting through the QB for Professional Level, including BPT is enough to do once. As long as you really do take the time to go through the answers and build the skills you need to do well in this exam. As mentioned, you also need to take the time to build in model answers from the QB into your open book file. The issue of repeating questions in BPT is that you may remember what taxes were relevant to the question because you have seen it before rather than actually knowing how to pull out the relevant taxes if it was an unseen question.

In terms of completing the paper, BPT is extremely time pressured. However, the easy marks are at the start of each question as you can get the marks for stating the basics of the relevant taxes you can pick out. I would always recommend for BPT to try to get through the whole paper instead of 80%. This is so rather than wasting time on the harder marks and missing those easier you can pick these all up.

For BST I found I was quite good at based on the progress test and mock exams I sat. I was already achieving 70+ so I felt quite confident for this one. For that reason, I did not do too much extra practice. I will be releasing a blog on this next Thursday but I probably spent one weekend going through and reading up on answers. Where I did practice was with the number analysis type questions as I found I could definitely improve on that and it would be beneficial to the exam.

I will definitely consider writing a blog on this! One thing I will say is that with audit you will continue to learn and grow. It is definitely a great starting point. Assess it each month or year and see where it goes or if you feel you are ready to move on.

All the best!

Thank you for the quick reply and detailed advice – very much appreciated. I guess I will switch my revision plan around to try and complete all the questions on the QB (never done that before but first time for everything) rather than only doing the majority of the ques but 2x/3x. I have actually bought an open book (BPT) notes online (from this site called ACAMasters) – so sorted for that but never thought of putting model answers from the QB into them – so that’s a great little tip!! Thank you again and I look forward to reading your future blogs!

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Hi Jag! Thanks for the post. I’m about to retake this exam and I wondered if you had any pointers on know which points are relevant and which aren’t? I sat a marked mocked yesterday and found a lot of the points I was making were not earning any marks. Any tips would be useful! Thanks in advance

No worries at all!

BPT can honestly be so difficult to pick out what is relevant and what is not but I really do think it comes with practice.

I think what could help in your situation is perhaps to thoroughly go through the same question again with the mark scheme and see what parts of the question/scenario triggered each part of the answer. It would also help by debriefing the other way to see why your points that gained no marks were not relevant as you may find there could be rules you are missing causing the tax not to be relevant in the given scenario. If you really take the time to go through this hopefully things start to click and fall into place.

As you are perhaps short of time with the exam being next week, I would recommend asking your tutor (assuming you have a training provider) to help explain why. Hopefully it is just small tweaks of knowledge to get you in the right direction.

I would also suggest trying a few new questions and doing answer plans to see if you start to spot key things that come up and help identify relevant taxes although there are so many.

All the best with your exam next week and fingers crossed for you!

Thank you so much for your advice Jag! I kept this in mind as I just sat the exam. Fingers crossed it went well! Thanks once again

No worries at all Faith – I hope the outcome is positive for you 🤞🤞

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Thank you Jag for all the tips! This has been very helpful. I am in the process of preparing for BPT, which I am sitting in December. Would you say BPT is more challenging than SBM, CR and Case Study? Just wondering what to expect next year.

No worries and good luck for BPT in December!

If you have seen my difficulty ranking: https://www.youtube.com/watch?v=BpKai9bELj0 I go into some detail about this where I did actually find CR to be more difficult than BPT. CR I found to be the hardest ACA exam and then BPT second. This is because with the BPT content, after a lot of question practice once you grasp the content the main difficulty comes with timing. However, with CR there is SO much content that can actually be very difficult to apply that the exam I felt did really increase in difficulty.

In this video I talk about why I almost failed CR which may be of interest: https://www.youtube.com/watch?v=Gu6bXPKUFGE . I think had my exam not have been so difficult, I would not have felt this way but because of the exam I had, I really did experience how difficult it can be.

I hope this helps!

Tried to contact you via email, it would be super helpful if we could organise a chat!

Hi Tej, I have just emailed you!

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Business planning: taxation. what to do to pass..

We're not going to lie ... BPT is not very nice. Arguably the most complex ACA paper from a technical point of view (yes, even more so than the Advanced Level), things are not made any easier by the fact that the examiners do not tell you how many marks are available for each part of the question paper! Doesn't exactly help with time management. BPT is also tricky because it is a mixture of narrative and calculations (don't overdo the calculations aspects, either in your revision or during the exam: most of the marks are actually for the narrative side of things). However, at least BPT is an open-book exam, so you can at least take some hopefully useful resources (including ours!) into the exam with you. Our popular BPT Exam Room Notes PDF publication provides alphabetically-organised, quick reference notes on all key BPT areas. Originally intended as a resource aimed at exam day (hence the name!), many students report that our BPT Exam Room Notes PDF was actually very useful in the pre-exam phase because they found it easy to locate the content. It seems pretty obvious to us that things are easier if your notes are alphabetically organised but unfortunately the ICAEW Workbook is organised primarily by chapter, so it isn't always so easy to use. We are pleased to announce that we can now offer our BPT Exam Room Notes PDF as an instant download so no more waiting around to receive the document (and no more frustrations with Junk Mail folders either!). Just click the link further down the page to make a purchase. We draw on this content and knowledge in our BPT Masterclass on-demand video course, which focuses on tutor-narrated discussions of our Skeleton Notes (notes based on past paper model answers) so that you can learn the patterns. The course is provided with a full Pass Guarantee (which may seem brave of us since this is after all BPT, but with a 100% pass rate for the course in 2021, 98% in 2022 and 99% in 2023, we are not too worried!). As with all the Professional Level ACA papers, it is vital that you use resources that force you to engage actively with the content: simply reading and note-taking is very unlikely to get the content into your brain! So for BPT, we offer our Rapid Revision Question Bank book which offers over a thousand short-form questions to help you learn both the narrative and number content through a self-test format. Actively testing your knowledge through questions is always the best way to deal with the volume of narrative content in this kind of paper. We can also offer our Technique Improvement Service to review your Mock practice attempts to unlock further valuable marks through improvements in writing style, interpretation of the question and other factors. Scroll down the page to learn more about our BPT offering.

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Business Planning: Taxation

The ACA professional level Business Planning: Taxation (BPT) exam is usually one of the middle professional stage exams sat by candidates. 

This is the only ACA exam that has variations of the same paper (as of a few years ago). The Business Planning module gives students the choice between Tax, Banking and Insurance variations. 

Although Banking and Insurance appear to be growing in popularity in recent sittings, it is still Tax which is by far the most popular and is the exam that I sat. Due to this, it is BPT which will be focused on in this post.

The BPT exam builds on the knowledge developed from the certificate level Principles of Tax (PoT) and although usually sat at the same time as Tax Compliance , also builds on many of the concepts which are introduced during that exam. 

Unless candidates work in tax, I consider this exam to be very different from work they are likely to have done as part of their day job. However a solid foundation of tax knowledge is certainly beneficial for your future career (and also future personal finances). 

Overview of Business Planning Taxation Exam

Method of assessment.

The BPT exam itself is 2.5 hours and given it forms part of the Professional level, it can only be sat in one of the quarterly exam periods, which are in March, June, September and December.

As such, in each exam sitting all candidates will be set the same questions.

The exam will consist of 3 longer form questions. One of these questions will be an integrated scenario carrying around 40 marks, with the other two questions carrying broadly even weighting. 

Given that this exam is at the professional stage, students will also be permitted to bring in their own permitted materials.

How to pass ACA Business Planning Taxation exam

To pass the Business Planning Taxation exam you need to make sure that you have a broad knowledge of each area of the syllabus. The best way of doing this is by taking the time to master the past questions from the question bank, and to really make sure that you know why the answer is the answer. 

It is also essential that you have very organised notes and know exactly where to turn when you see a certain topic appear in a question. The exam itself is very time pressured and therefore being able to find the correct section quickly will be a life saver. 

Possibly the biggest but most basic tip to passing this exam is to make sure you READ the question. Many people fail this exam because they mis-understand a question after not spending adequate time reading the requirements, meaning students can go completely off topic. I would strongly recommend reading the question multiple times and making a brief plan before tackling any question.  

How hard is the ACA Business Planning Taxation exam?

I would say that this is a very difficult exam and in my opinion is the hardest of all 15 ACA exams.

However, that is not to say that the exam is impossible; it’s not. As you can see from the pass rate, most people end up passing the exam. Make sure that you prepare well for the exam and you will be able to pass. 

I would give this exam a 5 out of 5 for difficulty. 

The pass rate for this exam is 78.50% .

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• Feb 1, 2020

How to Pass the ICAEW ACA Business Planning: Tax (BPT) Exam

Updated: Mar 4, 2022

This article offers our top five tips on how to pass the ACA Business Planning: Tax (BPT) exam. The advice contained in this article is taught as part of our popular BPT course which has seen several attendees scored over 90% in the BPT exam. Written by an ACA tutor who won multiple ICAEW prizes as a student, including one for Tax, this is a must read for any student preparing for their BPT exam.

Tip 1 – When starting your BPT preparation, ensure that your Tax Compliance (TC) knowledge is at least at the same level as when you passed TC

The BPT exam requires students to advise individuals and businesses on UK tax matters. Clearly, this requires a good understanding of UK tax rules and the majority of these rules were already covered in the TC exam. In fact, around 60% of the marks in the BPT exam are for technical matters already tested in the TC exam.

It is therefore strongly advised that your BPT preparation begins with re-learning of the TC technical content for each tax. As we consider this to be such a fundamental part of BPT preparation, we provide our students with access to our TC tutorials to give them a head start. Our experience is that students who complete this preparatory work find the advanced BPT content much easier to understand and apply. This then enables them to focus on exam technique from an earlier stage which leads them to higher marks.

Tip 2 – Identify which ‘scenarios’ are commonly tested

The BPT exam requires students to advise individuals and businesses on UK tax matters in ‘real-world’ scenarios. In practice, there are several tax matters which individuals and businesses frequently need advice on, such as:

Whether a start-up business should incorporate or operate as an unincorporated business

Whether an existing business should incorporate

How an incorporated business can distribute returns to director-shareholders tax efficiently

How to pass assets to children without triggering a tax charge

The optimal use of a tax loss for a large corporate group

Whether an internationally expanding business should set up a subsidiary company or a branch

These common ‘real-world’ scenarios are also the scenarios examiners use in the BPT exams. Unlike TC, BPT does not usually require students to calculate the tax liability for a single tax. Instead, BPT requires students to advise on all tax matters. Therefore, by practicing lots of past exam questions you will soon start to see which scenarios are commonly tested and which taxes apply to each. This should enable you to develop a broader understanding of tax and an ability to identify the tax implications of various scenarios.

Tip 3 – Practice several exam questions of the same scenario one after another

After using lots of past BPT exams to teach our students the optimal exam technique for a particular type of BPT exam scenario, we send our students away to practice lots exam questions on a similar scenario. For example, after being taught the technical content and exam technique for business incorporation, our students then practice several other past paper incorporation questions one after another.

This has the following benefits:

It familiarises you with how the examiners structure scenarios and questions

It enables you to identify patterns in how the scenario is examined

It enables you to apply the exam technique demonstrated during tuition

It improves your efficiency when using the open book notes

It enables you to identify weakness areas so that you can focus your technical learning and exam technique development on a particular area

It familiarises you with the ICAEW exam software

It enables you to improve your speed so that you don’t exceed your time allocation

Our BPT Master Plan categorises all the past exam questions by scenario/topic to make it easy to practice lots of questions on the same scenario/topic.

All our classes teach the technical content in the context of how it is likely to be examined before demonstrating how to answer exam questions on the topic. To give you an insight, one of the classes from our BPT course can be viewed for free here .

Tip 4 – Structure your open book notes so that they can be used effectively and time-efficiently in the exam

Open book exams present both a golden opportunity and fatal time trap. The BPT exam is incredibly time pressured so any time spent looking something up in your notes is time which could have been spent typing a mark scoring point. Therefore, your open book notes need to be concise and structured in a way that you can quickly look up information should you need to.

Given the technical nature of tax, we advise that notes include a summary of the key technical points for each tax. As the same scenarios come up time and time again in the BPT exam, it is highly recommended that you have a reminder of common points to consider including for each scenario. The example below, taken from our BPT Materials , demonstrates what we mean by this. Our students constantly feedback that this is an incredibly valuable resource in the exam as it enables them to include lots of points and cover the full breath of taxes.

As mentioned above, any time spent looking something up in your notes is time which could have been spent typing a mark scoring point. Therefore, you should aim to build your tax knowledge and to a level where you use the open book notes sparingly as this will enable you to type more in the exam. Personally, other than the Common Exam Scenario reminder section, I only use the materials if a very technical matter comes up, such as the crystallisation of a gain when an incorporated overseas PE disposes of an asset within 6 years.

Tip 5 – Bag the relatively easy ethics marks

Ethics is examined is all the ACA exams and whilst ethics questions do get harder as the ACA progresses, the ethics marks remain comparatively easier to the technical marks. BPT exams include up to 10 marks for ethics which equates to 18% of the marks needed to secure a 55% passing grade. Therefore, comparatively easy ethics marks offer the opportunity to bag 18% of the marks you need to pass - in what our opinion is - the hardest ACA Professional Level exam.

The most efficient exam strategy is to ensure that you have an exam technique which will ensure that you make the ten points needed to get maximum marks for ethics.

Need Help Passing the ACA BPT Exam?

Our BPT courses focus on the most frequently examined technical content and demonstrate the optimal exam technique for each type of BPT question. Sample classes from the course and our BPT Materials can be found here .

About the Author

Kieran Doe is a Senior ACA Tutor at ACA Masters. Kieran won ICAEW prizes for his performance in Financial Accounting and Reporting, Tax, Financial Management, Audit, Business Strategy and Case Study. This is in addition to winning several prizes at university for various Accounting, Management, Business and Economics subjects.

Kieran’s tuition is based around the learning techniques and exam strategies which enabled him to win prizes for all the subjects he teaches. Under his guidance, several of his ACA students have also won ICAEW prizes.

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• Professional Level

Professional Level Business Planning: Taxation

The Business Planning: Taxation module covers the following topics:

• ethics and law
• taxation of corporate entities
• taxation of owner-managed businesses
• personal taxation

Ensure you order the correct edition of the materials. The 2023 edition is aligned with the syllabus and exams for 2023 only. The 2024 edition is aligned with the syllabus and exams for 2024 only. You risk losing exam marks if you use a different edition.

For more information and resources, please visit icaew.com/examresources .

Available editions:

Business Tax Certification Exam

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NACPB's Uniform Business Tax Certification examination (exam) is the exam administered to candidates who want to obtain Business Tax Certification . The exam is developed and maintained by the National Association of Certified Public Bookkeepers (NACPB).

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Candidates who complete the Business Tax Fundamentals course and pass the Business Tax Certification exam may communicate to employers they possess Business Tax Certification and distinguish themselves and build credibility by having authorized use of the Business Tax Certification certificate and logo.

The exam is used to test the candidate's competency. The exam consists of 50 multiple choice questions and simulations. To pass the exam, you must receive a minimum of 75% (37 out of 50 questions).

The exam tests the following:

• Business Income, Deductions, and Accounting Methods
• Property Acquisition and Cost Recovery
• Property Dispositions
• Business Entities Overview
• Corporate Operations
• Accounting for Income Taxes
• Corporate Taxation: Nonliquidating Distributions
• Corporate Formation, Reorganization, and Liquidation
• Forming and Operating Partnerships
• Dispositions of Partnership Interests and Partnership Distributions
• S Corporations
• State and Local Taxes
• The U.S. Taxation of Multinational Transactions
• Transfer Taxes and Wealth Planning

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FACT SHEET: President   Biden Takes Action to Protect American Workers and Businesses from China’s Unfair Trade   Practices

President Biden’s economic plan is supporting investments and creating good jobs in key sectors that are vital for America’s economic future and national security. China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers. China is also flooding global markets with artificially low-priced exports. In response to China’s unfair trade practices and to counteract the resulting harms, today, President Biden is directing his Trade Representative to increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.   The Biden-Harris Administration’s Investing in America agenda has already catalyzed more than $860 billion in business investments through smart, public incentives in industries of the future like electric vehicles (EVs), clean energy, and semiconductors. With support from the Bipartisan Infrastructure Law, CHIPS and Science Act, and Inflation Reduction Act, these investments are creating new American jobs in manufacturing and clean energy and helping communities that have been left behind make a comeback.   As President Biden says, American workers and businesses can outcompete anyone—as long as they have fair competition. But for too long, China’s government has used unfair, non-market practices. China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90 percent of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care—creating unacceptable risks to America’s supply chains and economic security. Furthermore, these same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities.   Today’s actions to counter China’s unfair trade practices are carefully targeted at strategic sectors—the same sectors where the United States is making historic investments under President Biden to create and sustain good-paying jobs—unlike recent proposals by Congressional Republicans that would threaten jobs and raise costs across the board. The previous administration’s trade deal with China  failed  to increase American exports or boost American manufacturing as it had promised. Under President Biden’s Investing in America agenda, nearly 800,000 manufacturing jobs have been created and new factory construction has doubled after both fell under the previous administration, and the trade deficit with China is the lowest in a decade—lower than any year under the last administration.   We will continue to work with our partners around the world to strengthen cooperation to address shared concerns about China’s unfair practices—rather than undermining our alliances or applying indiscriminate 10 percent tariffs that raise prices on all imports from all countries, regardless whether they are engaged in unfair trade. The Biden-Harris Administration recognizes the benefits for our workers and businesses from strong alliances and a rules-based international trade system based on fair competition.   Following an in-depth review by the United States Trade Representative, President Biden is taking action to protect American workers and American companies from China’s unfair trade practices. To encourage China to eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation, the President is directing increases in tariffs across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products.   Steel and Aluminum   The tariff rate on certain steel and aluminum products under Section 301 will increase from 0–7.5% to 25% in 2024.   Steel is a vital sector for the American economy, and American companies are leading the future of clean steel. Recently, the Biden-Harris Administration announced $6 billion for 33 clean manufacturing projects including for steel and aluminum, including the first new primary aluminum smelter in four decades, made possible by the Bipartisan Infrastructure Law and the Inflation Reduction Act. These investments will make the United States one of the first nations in the world to convert clean hydrogen into clean steel, bolstering the U.S. steel industry’s competitiveness as the world’s cleanest major steel producer.   American workers continue to face unfair competition from China’s non-market overcapacity in steel and aluminum, which are among the world’s most carbon intensive. China’s policies and subsidies for their domestic steel and aluminum industries mean high-quality, low-emissions U.S. products are undercut by artificially low-priced Chinese alternatives produced with higher emissions. Today’s actions will shield the U.S. steel and aluminum industries from China’s unfair trade practices.   Semiconductors   The tariff rate on semiconductors will increase from 25% to 50% by 2025.   China’s policies in the legacy semiconductor sector have led to growing market share and rapid capacity expansion that risks driving out investment by market-driven firms. Over the next three to five years, China is expected to account for almost half of all new capacity coming online to manufacture certain legacy semiconductor wafers. During the pandemic, disruptions to the supply chain, including legacy chips, led to price spikes in a wide variety of products, including automobiles, consumer appliances, and medical devices, underscoring the risks of overreliance on a few markets.   Through the CHIPS and Science Act, President Biden is making a nearly $53 billion investment in American semiconductor manufacturing capacity, research, innovation, and workforce. This will help counteract decades of disinvestment and offshoring that has reduced the United States’ capacity to manufacture semiconductors domestically. The CHIPS and Science Act includes $39 billion in direct incentives to build, modernize, and expand semiconductor manufacturing fabrication facilities as well as a 25% investment tax credit for semiconductor companies. Raising the tariff rate on semiconductors is an important initial step to promote the sustainability of these investments.   Electric Vehicles (EVs)   The tariff rate on electric vehicles under Section 301 will increase from 25% to 100% in 2024.   With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70% from 2022 to 2023—jeopardizing productive investments elsewhere. A 100% tariff rate on EVs will protect American manufacturers from China’s unfair trade practices.   This action advances President Biden’s vision of ensuring the future of the auto industry will be made in America by American workers. As part of the President’s Investing in America agenda, the Administration is incentivizing the development of a robust EV market through business tax credits for manufacturing of batteries and production of critical minerals, consumer tax credits for EV adoption, smart standards, federal investments in EV charging infrastructure, and grants to supply EV and battery manufacturing. The increase in the tariff rate on electric vehicles will protect these investments and jobs from unfairly priced Chinese imports.   Batteries, Battery Components and Parts, and Critical Minerals   The tariff rate on lithium-ion EV batteries will increase from 7.5%% to 25% in 2024, while the tariff rate on lithium-ion non-EV batteries will increase from 7.5% to 25% in 2026. The tariff rate on battery parts will increase from 7.5% to 25% in 2024.   The tariff rate on natural graphite and permanent magnets will increase from zero to 25% in 2026. The tariff rate for certain other critical minerals will increase from zero to 25% in 2024.   Despite rapid and recent progress in U.S. onshoring, China currently controls over 80 percent of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining. Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk. In order to improve U.S. and global resiliency in these supply chains, President Biden has invested across the U.S. battery supply chain to build a sufficient domestic industrial base. Through the Bipartisan Infrastructure Law, the Defense Production Act, and the Inflation Reduction Act, the Biden-Harris Administration has invested nearly $20 billion in grants and loans to expand domestic production capacity of advanced batteries and battery materials. The Inflation Reduction Act also contains manufacturing tax credits to incentivize investment in battery and battery material production in the United States. The President has also established the American Battery Materials Initiative, which will mobilize an all-of-government approach to secure a dependable, robust supply chain for batteries and their inputs.   Solar Cells   The tariff rate on solar cells (whether or not assembled into modules) will increase from 25% to 50% in 2024.   The tariff increase will protect against China’s policy-driven overcapacity that depresses prices and inhibits the development of solar capacity outside of China. China has used unfair practices to dominate upwards of 80 to 90% of certain parts of the global solar supply chain, and is trying to maintain that status quo. Chinese policies and nonmarket practices are flooding global markets with artificially cheap solar modules and panels, undermining investment in solar manufacturing outside of China.   The Biden-Harris Administration has made historic investments in the U.S. solar supply chain, building on early U.S. government-enabled research and development that helped create solar cell technologies. The Inflation Reduction Act provides supply-side tax incentives for solar components, including polysilicon, wafers, cells, modules, and backsheet material, as well as tax credits and grant and loan programs supporting deployment of utility-scale and residential solar energy projects. As a result of President Biden’s Investing in America agenda, solar manufacturers have already announced nearly $17 billion in planned investment under his Administration—an 8-fold increase in U.S. manufacturing capacity, enough to supply panels for millions of homes each year by 2030.   Ship-to-Shore Cranes   The tariff rate on ship-to-shore cranes will increase from 0% to 25% in 2024.   The Administration continues to deliver for the American people by rebuilding the United States’ industrial capacity to produce port cranes with trusted partners. A 25% tariff rate on ship-to-shore cranes will help protect U.S. manufacturers from China’s unfair trade practices that have led to excessive concentration in the market. Port cranes are essential pieces of infrastructure that enable the continuous movement and flow of critical goods to, from, and within the United States, and the Administration is taking action to mitigate risks that could disrupt American supply chains. This action also builds off of ongoing work to invest in U.S. port infrastructure through the President’s Investing in America Agenda. This port security initiative includes bringing port crane manufacturing capabilities back to the United States to support U.S. supply chain security and encourages ports across the country and around the world to use trusted vendors when sourcing cranes or other heavy equipment.   Medical Products   The tariff rates on syringes and needles will increase from 0% to 50% in 2024. For certain personal protective equipment (PPE), including certain respirators and face masks, the tariff rates will increase from 0–7.5% to 25% in 2024. Tariffs on rubber medical and surgical gloves will increase from 7.5% to 25% in 2026.   These tariff rate increases will help support and sustain a strong domestic industrial base for medical supplies that were essential to the COVID-19 pandemic response, and continue to be used daily in every hospital across the country to deliver essential care. The federal government and the private sector have made substantial investments to build domestic manufacturing for these and other medical products to ensure American health care workers and patients have access to critical medical products when they need them. American businesses are now struggling to compete with underpriced Chinese-made supplies dumped on the market, sometimes of such poor quality that they may raise safety concerns for health care workers and patients.   Today’s announcement reflects President Biden’s commitment to always have the back of American workers. When faced with anticompetitive, unfair practices from abroad, the President will deploy any and all tools necessary to protect American workers and industry.  

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California Bar Pauses $1.5 Million Kaplan Exam Contract Plan

By Maia Spoto

The California State Bar delayed pitching a new licensing exam to its governing body on Thursday, saying the plan, which could slash the admissions fund’s deficit, needs more time to take shape.

The state bar had pitched a $1.475 million, five-year contract with Kaplan North America LLC to replace the Multistate Bar Exam with a different, “cost-effective” exam. Crafting new questions would enable the bar to administer the licensing test remotely or at small, vendor-owned test centers, saving between roughly $2.8 million and $4.2 million annually starting in 2025.

“Given the import of the issues, I really think it is ...

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A Plan to Remake the Middle East

While talks for a cease-fire between israel and hamas continue, another set of negotiations is happening behind the scenes..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From New York Times, I’m Michael Barbaro. This is The Daily.

[MUSIC CONTINUES]

Today, if and when Israel and Hamas reach a deal for a ceasefire fire, the United States will immediately turn to a different set of negotiations over a grand diplomatic bargain that it believes could rebuild Gaza and remake the Middle East. My colleague Michael Crowley has been reporting on that plan and explains why those involved in it believe they have so little time left to get it done.

It’s Wednesday, May 8.

Michael, I want to start with what feels like a pretty dizzying set of developments in this conflict over the past few days. Just walk us through them?

Well, over the weekend, there was an intense round of negotiations in an effort, backed by the United States, to reach a ceasefire in the Gaza war.

The latest ceasefire proposal would reportedly see as many as 33 Israeli hostages released in exchange for potentially hundreds of Palestinian prisoners.

US officials were very eager to get this deal.

Pressure for a ceasefire has been building ahead of a threatened Israeli assault on Rafah.

Because Israel has been threatening a military offensive in the Southern Palestinian city of Rafah, where a huge number of people are crowded.

Fleeing the violence to the North. And now they’re packed into Rafah. Exposed and vulnerable, they need to be protected.

And the US says it would be a humanitarian catastrophe on top of the emergency that’s already underway.

Breaking news this hour — very important breaking news. An official Hamas source has told The BBC that it does accept a proposal for a ceasefire deal in Gaza.

And for a few hours on Monday, it looked like there might have been a major breakthrough when Hamas put out a statement saying that it had accepted a negotiating proposal.

Israeli Prime Minister Benjamin Netanyahu says the ceasefire proposal does not meet his country’s requirements. But Netanyahu says he will send a delegation of mediators to continue those talks. Now, the terms —

But those hopes were dashed pretty quickly when the Israelis took a look at what Hamas was saying and said that it was not a proposal that they had agreed to. It had been modified.

And overnight —

Israeli troops stormed into Rafah. Video showing tanks crashing over a sign at the entrance of the city.

— the Israelis launched a partial invasion of Rafah.

It says Hamas used the area to launch a deadly attack on Israeli troops over the weekend.

And they have now secured a border crossing at the Southern end of Gaza and are conducting targeted strikes. This is not yet the full scale invasion that President Biden has adamantly warned Israel against undertaking, but it is an escalation by Israel.

So while all that drama might suggest that these talks are in big trouble, these talks are very much still alive and ongoing and there is still a possibility of a ceasefire deal.

And the reason that’s so important is not just to stop the fighting in Gaza and relieve the suffering there, but a ceasefire also opens the door to a grand diplomatic bargain, one that involves Israel and its Arab neighbors and the Palestinians, and would have very far-reaching implications.

And what is that grand bargain. Describe what you’re talking about?

Well, it’s incredibly ambitious. It would reshape Israel’s relationship with its Arab neighbors, principally Saudi Arabia. But it’s important to understand that this is a vision that has actually been around since well before October 7. This was a diplomatic project that President Biden had been investing in and negotiating actually in a very real and tangible way long before the Hamas attacks and the Gaza war.

And President Biden was looking to build on something that President Trump had done, which was a series of agreements that the Trump administration struck in which Israel and some of its Arab neighbors agreed to have normal diplomatic relations for the first time.

Right, they’re called the Abraham Accords.

That’s right. And, you know, Biden doesn’t like a lot of things, most things that Trump did. But he actually likes this, because the idea is that they contribute to stability and economic integration in the Middle East, the US likes Israel having friends and likes having a tight-knit alliance against Iran.

President Biden agrees with the Saudis and with the Israelis, that Iran is really the top threat to everybody here. So, how can you build on this? How can you expand it? Well, the next and biggest step would be normalizing relations between Israel and Saudi Arabia.

And the Saudis have made clear that they want to do this and that they’re ready to do this. They weren’t ready to do it in the Trump years. But Mohammed bin Salman, the Crown Prince of Saudi Arabia, has made clear he wants to do it now.

So this kind of triangular deal began to take shape before October 7, in which the US, Israel, and Saudi Arabia would enter this three way agreement in which everyone would get something that they wanted.

And just walk through what each side gets in this pre-October 7th version of these negotiations?

So for Israel, you get normalized ties with its most important Arab neighbor and really the country that sets the tone for the whole Muslim world, which is Saudi Arabia of course. It makes Israel feel safer and more secure. Again, it helps to build this alliance against Iran, which Israel considers its greatest threat, and it comes with benefits like economic ties and travel and tourism. And Prime Minister Benjamin Netanyahu has been very open, at least before October 7th, that this was his highest diplomatic and foreign policy priority.

For the Saudis, the rationale is similar when it comes to Israel. They think that it will bring stability. They like having a more explicitly close ally against Iran. There are economic and cultural benefits. Saudi Arabia is opening itself up in general, encouraging more tourism.

But I think that what’s most important to the Crown Prince, Mohammed bin Salman, is what he can get from the United States. And what he has been asking for are a couple of essential things. One is a security agreement whose details have always been a little bit vague, but I think essentially come down to reliable arms supplies from the United States that are not going to be cut off or paused on a whim, as he felt happened when President Biden stopped arms deliveries in 2021 because of how Saudi was conducting its war in Yemen. The Saudis were furious about that.

Saudi Arabia also wants to start a domestic nuclear power program. They are planning for a very long-term future, possibly a post-oil future. And they need help getting a nuclear program off the ground.

And they want that from the US?

And they want that from the US.

Now, those are big asks from the us. But from the perspective of President Biden, there are some really enticing things about this possible agreement. One is that it will hopefully produce more stability in the region. Again, the US likes having a tight-knit alliance against Iran.

The US also wants to have a strong relationship with Saudi Arabia. You know, despite the anger at Mohammed bin Salman over the murder of the Saudi dissident Jamal Khashoggi, the Biden administration recognizes that given the Saudis control over global oil production and their strategic importance in the Middle East, they need to have a good relationship with them. And the administration has been worried about the influence of China in the region and with the Saudis in particular.

So this is an opportunity for the US to draw the Saudis closer. Whatever our moral qualms might be about bin Salman and the Saudi government, this is an opportunity to bring the Saudis closer, which is something the Biden administration sees as a strategic benefit.

All three of these countries — big, disparate countries that normally don’t see eye-to-eye, this was a win-win-win on a military, economic, and strategic front.

That’s right. But there was one important actor in the region that did not see itself as winning, and that was the Palestinians.

[MUSIC PLAYING]

First, it’s important to understand that the Palestinians have always expected that the Arab countries in the Middle East would insist that Israel recognize a Palestinian state before those countries were willing to essentially make total peace and have normal relations with Israel.

So when the Abraham Accords happened in the Trump administration, the Palestinians felt like they’d been thrown under the bus because the Abraham Accords gave them virtually nothing. But the Palestinians did still hold out hope that Saudi Arabia would be their savior. And for years, Saudi Arabia has said that Israel must give the Palestinians a state if there’s going to be a normal relationship between Israel and Saudi Arabia.

Now the Palestinians see the Saudis in discussions with the US and Israel about a normalization agreement, and there appears to be very little on offer for the Palestinians. And they are feeling like they’re going to be left out in the cold here.

Right. And in the minds of the Palestinians, having already been essentially sold out by all their other Arab neighbors, the prospect that Saudi Arabia, of all countries, the most important Muslim Arab country in the region, would sell them out, had to be extremely painful.

It was a nightmare scenario for them. And in the minds of many analysts and US officials, this was a factor, one of many, in Hamas’s decision to stage the October 7th attacks.

Hamas, like other Palestinian leaders, was seeing the prospect that the Middle East was moving on and essentially, in their view, giving up on the Palestinian cause, and that Israel would be able to have friendly, normal relations with Arab countries around the region, and that it could continue with hardline policies toward the Palestinians and a refusal, as Prime Minister Benjamin Netanyahu has said publicly, to accept a Palestinian state.

Right. So Michael, once Hamas carries out the October 7th attacks in an effort to destroy a status quo that it thinks is leaving them less and less relevant, more and more hopeless, including potentially this prospect that Saudi Arabia is going to normalize relations with Israel, what happens to these pre-October 7th negotiations between the US, Saudi Arabia, and Israel?

Well, I think there was a snap assumption that these talks were dead and buried. That they couldn’t possibly survive a cataclysm like this.

But then something surprising happened. It became clear that all the parties were still determined to pull-off the normalization.

And most surprisingly of all, perhaps, was the continued eagerness of Saudi Arabia, which publicly was professing outrage over the Israeli response to the Hamas attacks, but privately was still very much engaged in these conversations and trying to move them forward.

And in fact, what has happened is that the scope of this effort has grown substantially. October 7th didn’t kill these talks. It actually made them bigger, more complicated, and some people would argue, more important than ever.

We’ll be right back.

Michael, walk us through what exactly happens to these three-way negotiations after October 7th that ends up making them, as you just said, more complicated and more important than ever?

Well, it’s more important than ever because of the incredible need in Gaza. And it’s going to take a deal like this and the approval of Saudi Arabia to unlock the kind of massive reconstruction project required to essentially rebuild Gaza from the rubble. Saudi Arabia and its Arab friends are also going to be instrumental in figuring out how Gaza is governed, and they might even provide troops to help secure it. None of those things are going to happen without a deal like this.

Fascinating.

But this is all much more complicated now because the price for a deal like this has gone up.

And by price, you mean?

What Israel would have to give up. [MUSIC PLAYING]

From Saudi Arabia’s perspective, you have an Arab population that is furious at Israel. It now feels like a really hard time to do a normalization deal with the Israelis. It was never going to be easy, but this is about as bad a time to do it as there has been in a generation at least. And I think that President Biden and the people around him understand that the status quo between Israel and the Palestinians is intolerable and it is going to lead to chaos and violence indefinitely.

So now you have two of the three parties to this agreement, the Saudis and the Americans, basically asking a new price after October 7th, and saying to the Israelis, if we’re going to do this deal, it has to not only do something for the Palestinians, it has to do something really big. You have to commit to the creation of a Palestinian state. Now, I’ll be specific and say that what you hear the Secretary of State, Antony Blinken, say is that the agreement has to include an irreversible time-bound path to a Palestinian state.

We don’t know exactly what that looks like, but it’s some kind of a firm commitment, the likes of which the world and certainly the Israelis have not made before.

Something that was very much not present in the pre-October 7th vision of this negotiation. So much so that, as we just talked about, the Palestinians were left feeling completely out in the cold and furious at it.

That’s right. There was no sign that people were thinking that ambitiously about the Palestinians in this deal before October 7th. And the Palestinians certainly felt like they weren’t going to get much out of it. And that has completely changed now.

So, Michael, once this big new dimension after October 7th, which is the insistence by Saudi Arabia and the US that there be a Palestinian state or a path to a Palestinian state, what is the reaction specifically from Israel, which is, of course, the third major party to this entire conversation?

Well, Israel, or at least its political leadership, hates it. You know, this is just an extremely tough sell in Israel. It would have been a tough sell before October 7th. It’s even harder now.

Prime Minister Benjamin Netanyahu is completely unrepentantly open in saying that there’s not going to be a Palestinian state on his watch. He won’t accept it. He says that it’s a strategic risk to his country. He says that it would, in effect, reward Hamas.

His argument is that terrorism has forced a conversation about statehood onto the table that wasn’t there before October 7th. Sure, it’s always in the background. It’s a perennial issue in global affairs, but it was not something certainly that the US and Israel’s Arab neighbors were actively pushing. Netanyahu also has — you know, he governs with the support of very right-wing members of a political coalition that he has cobbled together. And that coalition is quite likely to fall apart if he does embrace a Palestinian state or a path to a Palestinian state.

Now, he might be able to cobble together some sort of alternative, but it creates a political crisis for him.

And finally, you know, I think in any conversation about Israel, it’s worth bearing in mind something you hear from senior US officials these days, which is that although there is often finger pointing at Netanyahu and a desire to blame Netanyahu as this obstructionist who won’t agree to deals, what they say is Netanyahu is largely reflecting his population and the political establishment of his country, not just the right-wingers in his coalition who are clearly extremist.

But actually the prevailing views of the Israeli public. And the Israeli public and their political leaders across the spectrum right now with few exceptions, are not interested in talking about a Palestinian state when there are still dozens and dozens of Israeli hostages in tunnels beneath Gaza.

So it very much looks like this giant agreement that once seemed doable before October 7th might be more important to everyone involved than ever, given that it’s a plan for rebuilding Gaza and potentially preventing future October 7th’s from happening, but because of this higher price that Israel would have to pay, which is the acceptance of a Palestinian state, it seems from everything you’re saying, that this is more and more out of reach than ever before and hard to imagine happening in the immediate future. So if the people negotiating it are being honest, Michael, are they ready to acknowledge that it doesn’t look like this is going to happen?

Well, not quite yet. As time goes by, they certainly say it’s getting harder and harder, but they’re still trying, and they still think there’s a chance. But both the Saudis and the Biden administration understand that there’s very little time left to do this.

Well, what do you mean there’s very little time left? It would seem like time might benefit this negotiation in that it might give Israel distance from October 7th to think potentially differently about a Palestinian state?

Potentially. But Saudi Arabia wants to get this deal done in the Biden administration because Mohammed bin Salman has concluded this has to be done under a Democratic president.

Because Democrats in Congress are going to be very reluctant to approve a security agreement between the United States and Saudi Arabia.

It’s important to understand that if there is a security agreement, that’s something Congress is going to have to approve. And you’re just not going to get enough Democrats in Congress to support a deal with Saudi Arabia, who a lot of Democrats don’t like to begin with, because they see them as human rights abusers.

But if a Democratic president is asking them to do it, they’re much more likely to go along.

Right. So Saudi Arabia fears that if Biden loses and Trump is president, that those same Democrats would balk at this deal in a way that they wouldn’t if it were being negotiated under President Biden?

Exactly. Now, from President Biden’s perspective, politically, think about a president who’s running for re-election, who is presiding right now over chaos in the Middle East, who doesn’t seem to have good answers for the Israeli-Palestinian question, this is an opportunity for President Biden to deliver what could be at least what he would present as a diplomatic masterstroke that does multiple things at once, including creating a new pathway for Israel and the Palestinians to coexist, to break through the logjam, even as he is also improving Israel’s relations with Saudi Arabia.

So Biden and the Crown Prince hope that they can somehow persuade Bibi Netanyahu that in spite of all the reasons that he thinks this is a terrible idea, that this is a bet worth taking on Israel’s and the region’s long-term security and future?

That’s right. Now, no one has explained very clearly exactly how this is going to work, and it’s probably going to require artful diplomacy, possibly even a scenario where the Israelis would agree to something that maybe means one thing to them and means something else to other people. But Biden officials refuse to say that it’s hopeless and they refuse to essentially take Netanyahu’s preliminary no’s for an answer. And they still see some way that they can thread this incredibly narrow needle.

Michael, I’m curious about a constituency that we haven’t been talking about because they’re not at the table in these discussions that we are talking about here. And that would be Hamas. How does Hamas feel about the prospect of such a deal like this ever taking shape. Do they see it as any kind of a victory and vindication for what they did on October 7th?

So it’s hard to know exactly what Hamas’s leadership is thinking. I think they can feel two things. I think they can feel on the one hand, that they have established themselves as the champions of the Palestinian people who struck a blow against Israel and against a diplomatic process that was potentially going to leave the Palestinians out in the cold.

At the same time, Hamas has no interest in the kind of two-state solution that the US is trying to promote. They think Israel should be destroyed. They think the Palestinian state should cover the entire geography of what is now Israel, and they want to lead a state like that. And that’s not something that the US, Saudi Arabia, or anyone else is going to tolerate.

So what Hamas wants is to fight, to be the leader of the Palestinian people, and to destroy Israel. And they’re not interested in any sort of a peace process or statehood process.

It seems very clear from everything you’ve said here that neither Israel nor Hamas is ready to have the conversation about a grand bargain diplomatic program. And I wonder if that inevitably has any bearing on the ceasefire negotiations that are going on right now between the two of them that are supposed to bring this conflict to some sort of an end, even if it’s just temporary?

Because if, as you said, Michael, a ceasefire opens the door to this larger diplomatic solution, and these two players don’t necessarily want that larger diplomatic solution, doesn’t that inevitably impact their enthusiasm for even reaching a ceasefire?

Well, it certainly doesn’t help. You know, this is such a hellish problem. And of course, you first have the question of whether Israel and Hamas can make a deal on these immediate issues, including the hostages, Palestinian prisoners, and what the Israeli military is going to do, how long a ceasefire might last.

But on top of that, you have these much bigger diplomatic questions that are looming over them. And it’s not clear that either side is ready to turn and face those bigger questions.

So while for the Biden administration and for Saudi Arabia, this is a way out of this crisis, these larger diplomatic solutions, it’s not clear that it’s a conversation that the two parties that are actually at war here are prepared to start having.

Well, Michael, thank you very much. We appreciate it.

On Tuesday afternoon, under intense pressure from the US, delegations from Israel and Hamas arrived in Cairo to resume negotiations over a potential ceasefire. But in a statement, Israel’s Prime Minister Benjamin Netanyahu made clear that even with the talks underway, his government would, quote, “continue to wage war against Hamas.”

Here’s what else you need to know today. In a dramatic day of testimony, Stormy Daniels offered explicit details about an alleged sexual encounter with Donald Trump that ultimately led to the hush money payment at the center of his trial. Daniels testified that Trump answered the door in pajamas, that he told her not to worry that he was married, and that he did not use a condom when they had sex.

That prompted lawyers for Trump to seek a mistrial based on what they called prejudicial testimony. But the judge in the case rejected that request. And,

We’ve seen a ferocious surge of anti-Semitism in America and around the world.

In a speech on Tuesday honoring victims of the Holocaust, President Biden condemned what he said was the alarming rise of anti-Semitism in the United States after the October 7th attacks on Israel. And he expressed worry that too many Americans were already forgetting the horrors of that attack.

The Jewish community, I want you to know I see your fear, your hurt, and your pain. Let me reassure you, as your president, you’re not alone. You belong. You always have and you always will.

Today’s episode was produced by Nina Feldman, Clare Toeniskoetter, and Rikki Novetsky. It was edited by Liz O. Baylen, contains original music by Marion Lozano, Elisheba Ittoop, and Dan Powell, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for The Daily. I’m Michael Barbaro. See you tomorrow.

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Hosted by Michael Barbaro

Featuring Michael Crowley

Produced by Nina Feldman ,  Clare Toeniskoetter and Rikki Novetsky

Edited by Liz O. Baylen

Original music by Marion Lozano ,  Elisheba Ittoop and Dan Powell

Engineered by Alyssa Moxley

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music | YouTube

If and when Israel and Hamas reach a deal for a cease-fire, the United States will immediately turn to a different set of negotiations over a grand diplomatic bargain that it believes could rebuild Gaza and remake the Middle East.

Michael Crowley, who covers the State Department and U.S. foreign policy for The Times, explains why those involved in this plan believe they have so little time left to get it done.

On today’s episode

Michael Crowley , a reporter covering the State Department and U.S. foreign policy for The New York Times.

Background reading :

Talks on a cease-fire in the Gaza war are once again at an uncertain stage .

Here’s how the push for a deal between Israel and Saudi Arabia looked before Oct. 7 .

From early in the war, President Biden has said that a lasting resolution requires a “real” Palestinian state .

Here’s what Israeli officials are discussing about postwar Gaza.

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The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Michael Crowley covers the State Department and U.S. foreign policy for The Times. He has reported from nearly three dozen countries and often travels with the secretary of state. More about Michael Crowley

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