Friday Five – 16 October – 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

These questions relate to examinable tax year 2015/16, examinable until 31 August 2016.

1. What is the difference in legal status between an IFA and a representative of a product provider?
   1. A provider’s representative is the agent of the provider, an IFA is the agent of the client
   2. A provider’s representative can only be self-employed whereas an IFA can be a sole trader, partnership or limited company
   3. A provider’s representative can only offer advice in one product area, whereas an IFA can offer advice from across the financial services spectrum
   4. A provider representative acts as an introducer only, an IFA is authorised to advise

2. Gordon’s growth model assumes that:
   1. NAV grows at a constant rate
   2. future dividends grow at a constant rate
   3. NAV reflects current share price
   4. future dividends stay the same

3. Majestic plc pays a net dividend of £270 each to two brothers, Jason and Miles. Jason is a higher rate taxpayer and Miles is an additional rate taxpayer. Which of the following is correct regarding their additional income tax liabilities?
   1. Jason will pay an extra 30%
   2. Miles will pay an extra 35%
   3. Jason has an additional liability of £67.50
   4. Miles has an additional liability of £101.25

4. Mark makes a lump sum pension contribution of £60,000 into his SIPP on 1 June 2015. He then makes another lump sum contribution of £30,000 on 15 December 2015. He has no available unused annual allowance to carry forward from previous years and has not as yet started taking benefits nor has he any other pension plans. He would therefore have an overall annual allowance charge based on an excess of:
   1. £10,000.
   2. £20,000.
   3. £50,000.
   4. £60,000.

5. Barbara is single and owns a house valued at £500,000, it is the major asset in her estate. If she takes out a lifetime mortgage for £150,000 and gives the money to her nephews and nieces which tax is potentially being avoided?
   1. Capital Gains Tax
   2. Inheritance Tax
   3. Corporation Tax
   4. Stamp Duty Land Tax

Answers

1. A – See R01 Study Text, Chp 7 Section A2B
   Grab our taster mock exam paper for CII R01. Click here to download.

2. B – See J10 Study Text, Chp 12 Section C2A
   Grab our taster mock exam paper for CII J10. Click here to download.

3. C – See R03 Study Text, Chp 9 Section B1A
   Grab our taster mock exam paper for CII R03. Click here to download.

4. A – See R04 Study Text, Chp 2.1 Section C1
   Grab our taster mock exam paper for CII R04. Click here to download.

5. B – See ER1 Study Text, Chp 7 Section A3
   Grab our taster mock exam paper for CII ER1. 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!)