I have a 2860ac connected to BT via VDSL which is working fine using 192.168.9.x range. In the same building I want to add via ethernet cable a 2850n to create a separate test network on 192.168.7.x but that can also access the internet via the 2860. I have tried but can't get to work the following setup. Can any one help?

LAN3 on 2860 setup with IP 192.168.7.254, Mask 255.255.255.0, NAT enabled, DHCP enabled. Then created VLAN2 on Port 6 set to subnet LAN3 (no VLAN tags). I then plugged the 2850 LAN port into port 6 on the 2860. Regardless of how I seem to configure the 2850 I cannot get it to provide internet access to the PC attached to the 2850. Also where should the DHCP be for the 2850 attached devices?? Do I disable DHCP on the 2860 for LAN3 and run DHCP on the 2850 as normal? As you can tell I am novice networking person so all help appreciated.

Simplest suggestion would be to plug the WAN port of the 2850 into a LAN port on the 2860.
Forget about the VLANs for a moment.

BT -> 2860WAN -> 2860LAN -> 2850WAN -> 2850LAN
Give the 2850 WAN a static IP address in the 192.168.9.x range, and set the default gateway to be the 2860 LAN IP.

2850 WAN interface
Static IP in 192.168.9.x range that isn't in the 2860's DHCP scope
Default gateway should be the 2860's LAN IP (192.168.9.?)
2850 LAN interface
Setup your DHCP scope as normal. (e.g. 192.168.7.0/24)

Anything plugged into the 2850 will pickup an address in that range, and if it wants to get to the internet, it will be sent to the default gateway (the WAN interface on the 2850) and the 2860 will then use it's own routing to send it out.
LAN to LAN connections between (Draytek) routers are a little bit "interesting" to try and set up successfully, it's a LOT easier to use WAN to LAN connection.
Good luck with this, I have a similar test setup working using a pair of 2920s
If you're still having problems, if you post the IP addresses, I can give a more concrete config if you need it
Simon

I had managed to get it working using a VLAN on P6 of the 2860 but your configuration is much simpler and gets the same results without having DHCP running on the VLAN and the 2850. All up and running - thanks for you help.