Friday Five – 17 March – 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 2016/17, examinable until 31 August 2017.

1. What information must be given in a direct offer financial promotion? Tick all that apply.
   1. Must always mention that tax treatments can change
   2. Confirmation that the firm is regulated or authorised by the FCA
   3. Full name and address of the person offering the investment
   4. Details of any charges and expenses

2. The stocks and shares ISA Alison wishes to invest in holds OEICs and carries an initial charge of 5%. What effect does this have on her investment?
   1. The 5% initial charge is taken from her ISA subscription
   2. She can pay the 5% charge separately to leave her full subscription intact
   3. She would be able to replace the initial charge with an early encashment penalty
   4. As a one-off fee, it won’t apply to next year’s subscription

3. Thomas is an additional rate taxpayer and makes a gift aid payment of £5,000 to a charity. How much can the charity reclaim from HMRC?
   1. £500
   2. £1,000
   3. £1,250
   4. £2,250

4. Kalib will reach State pension age in 2017. What should he be aware of regarding the new State pension? Tick all that apply.
   1. He will not be able to defer it in exchange for a lump sum.
   2. He will need a minimum of 15 qualifying years to receive any.
   3. He may receive more than the full single-tier State pension.
   4. A foundation amount will be calculated when he reaches State pension age.

5. Don, who has never been married, has recently sold his property for £500,000 before moving into residential care – he has no other assets and does not have sufficient income to fund all of his care costs. How could an Immediate Needs annuity be advantageous for Inheritance Tax (IHT) planning purposes?
   1. Because it includes life assurance cover which could help meet the IHT liability
   2. Because the purchase of the annuity is a Potentially Exempt Transfer (PET) for IHT purposes
   3. An immediate needs annuity with a purchase price of £175,000 or more would reduce his total estate to less than the IHT nil rate band of £325,000 removing any potential IHT liability
   4. Because the premiums would be covered by the “out of normal expenditure” exemption

Answers

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

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

3. C – See R03 Study Text, Chp 1
   Grab our taster mock exam paper for CII R03. Click here to download.

4. AC – See R04 Study Text, Chp 7
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See CF8 Study Text, Chp 8
   Grab our taster mock exam paper for CII CF8. 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!)