Friday Five – 15 July – 5 Questions in 5 Minutes

Welcome to this week’s Friday Five – 5 Questions in 5 Minutes Every Friday

What’s this all about?

It’s a bit of Friday Fun where we provide you with 5 questions relevant to a mix of CII exams. The challenge is for you to answer them in 5 minutes. Answers at the bottom of the page.

Questions

IMPORTANT! These questions relate to examinable tax year 2015/16, examinable by the CII until 31 August 2016. They do not relate to tax year 2016/17 which is only examinable by the CII from 1 September 2016.

1. What is the Information Commissioner’s Office’s main duty?
   1. To ensure that the Data Protection Act is updated e.g. to cover text messages
   2. To levy fines on those failing to comply with the Data Protection Act
   3. To ensure consumers are able to access information
   4. To oversee compliance with the Data Protection Act

2. The share price of an investment trust is said to be trading at a discount. What does this mean?
   1. The demand for the investment trust is high
   2. The net asset value of the unit trust has been diluted to take into account all outstanding warrants
   3. Shareholders are ‘buying’ the underlying assets at a lower price than they would pay if they bought the same investments directly
   4. The existence of the discount means that the investment trust is less volatile than a broadly equivalent unit trust

3. A company pays a basic rate taxpaying director a dividend. What is the tax liability for both the company and the director?
   1. There is no tax implication for the company and the director receive the income with a 10% tax credit which satisfies his liability
   2. The company is liable to corporation tax on the dividend payment and the director is liable to income tax at 22.5%
   3. The company pays dividend tax at 10% which the director is able to reclaim
   4. The company claims the dividend payment as an expense and the dividend is taxed at 40%

4. Which of the following people should be able to claim carer’s allowance?
   1. Jenna, who is aged 15 and a school student, who spends approximately 40 hours per week caring for her disabled mother
   2. Brian, aged 40, who has a part-time job earning £90 per week, who spends 20 hours a week caring for his elderly mother
   3. Karen, aged 35, who is unemployed and spends approximately 42 hours per week caring for her disabled son who is in receipt of disability living allowance
   4. Fred, aged 80, who receives State Pension of £113.10 per week, and is the full-time carer of his wife Doris who he lives with in the family home

5. Harry, who is a higher rate taxpayer left his employer’s occupational money purchase scheme after nearly two year’s pensionable service and received a refund of £24,000 member contributions in August 2015. How much of a lump sum will he receive after any tax is deducted?
   1. £14,400.
   2. £18,000.
   3. £19,600.
   4. £24,000

Answers

1. D – See R01 Study Text, Chp 4, Section D3
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R02 Study Text, Chp 6:1, Section G2C
   Grab our taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 8, Section B4
   Grab our taster mock exam paper for CII R03. Click here to download.

4. C – See CF8 Study Text, Chp 7, Section A4
   Grab our taster mock exam paper for CII CF8. Click here to download.

5. B – See R08 Study Text, Chp 4, Section E
   Grab our taster mock exam paper for CII R08. Click here to download.

How did you find this week’s questions? Did you complete them in 5 minutes? Did you get them all correct? Do you disagree with any?

Do let us know by leaving a comment below – we promise to read them all. (Humour particularly appreciated on a Friday!)