Solicitors Accounts for the SQE

Solicitors Accounts is examined in both FLK2 sessions, inside Property and inside Wills, and almost every question comes down to one thing: whose money is it, and which side of the ledger does it go on? This free PDF takes you from the SRA Accounts Rules to the double entry, with two fully worked ledgers.

Updated October 2026 · checked against the SRA Accounts Rules, SRA guidance and HMRC VAT Notice 700 on 2 October 2026.

How Solicitors Accounts is tested

There is no separate accounts paper. The SRA’s SQE1 specification places Solicitors Accounts in FLK2, examined in the context of Property Law and Practice and of Wills and the Administration of Estates. From January 2027 that means it can appear in both FLK2 sessions: with wills, trusts and land law in session 1, and with property and criminal law in session 2. The questions are single best answer and closed book, so the rules and the entries have to be in your head. The SRA Accounts Rules have been in effect since 25 November 2019, so they apply to every 2027 sitting.

Client money or business money?

Rule 2.1 defines client money as money you hold or receive in four situations. Learn them with an example each:

Client money goes into a client account promptly (rule 2.3), at a bank or building society in England and Wales, in an account whose name includes the firm’s name and the word “client” (rule 3). It must be kept separate from the firm’s money, and it comes out only for the purpose it is held for, on instructions, or with SRA authority or in prescribed circumstances (rule 5.1), and only if that client has enough (rule 5.3). A client account must never be used as a banking facility (rule 3.3).

The entries you must be able to post

The debit and credit layout is standard double-entry bookkeeping, presented as our method. The SRA requires accurate, contemporaneous and chronological records, and its guidance says books should be kept on the double-entry principle.

Bills, VAT and disbursements

Before you take your costs from client money you must give the client a bill or other written notification of the costs, and you may then transfer only the specific sum billed (rule 4.3). VAT is charged at 20 per cent. The specification asks for disbursements using the agency and principal methods: under the agency method the firm pays as the client’s agent and recovers the exact amount, adding no VAT of its own; under the principal method the supply was made to the firm, so the cost becomes part of the firm’s own fee and carries VAT. HMRC’s own examples include a bank’s fee for sending money, which cannot be treated as a VAT disbursement.

What is inside the PDF

• How accounts is examined in FLK2, and the specification on one page
• A client money decision tree, with mixed payments and the exceptions
• The client account rules, withdrawals, banking facilities and the £500 residual balance line
• The client ledger and the twelve entries to know
• Agency and principal disbursements, bills and VAT
• Two worked ledgers: a house purchase and an estate
• Interest, breaches, five-weekly reconciliation and accountants’ reports
• Ten exam traps, ten self-test questions and a checklist

For every line of the specification word for word, see our free SQE1 Specification Checklist. For what changed in 2027, see the SQE 2027 changes hub.

Frequently asked questions