Friday Five – 24 May – 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.
IMPORTANT! These questions relate to examinable tax year 2018/19, examinable by the CII until 31 August 2019. They do not relate to tax year 2019/20 which is only examinable by the CII from 1 September 2019.
- What is the difference between a compulsory purchase annuity (CPA) and a purchased life annuity (PLA)?
- CPAs must be bought from the life office where the pension fund has accumulated.
- Only the income element of a PLA is taxable whereas the whole amount of CPA income is taxable.
- CPAs generally offer better annuity rates than PLAs.
- CPAs can only be purchased from pension fund proceeds and PLAs can only be purchased from tax-free lump sums.
- Why might an investor prefer to invest in an offshore reporting fund instead of a non-reporting fund? Tick all that apply.
- To avoid the non-reclaimable withholding tax
- Because dividends are paid gross
- Any capital gain is subject to normal CGT rules
- To benefit from enhanced consumer protection
- When would a Capital Gains Tax (CGT) chargeable disposal be deemed to have taken place in the following scenarios?
- Sian, a beneficiary under a trust becomes absolutely entitled to the trust assets
- James makes a gain of £120,000 on selling his main residence
- A married couple change ownership of their investment bond when one becomes a basic rate taxpayer
- Peter dies and his antique car is passed to his son in accordance with his wishes
- John is self-employed and is wondering whether to purchase a buy‐to‐let property to help supplement his future retirement income. Which of the following are considerations for John? Tick all that apply.
- Interest on a mortgage can be offset against rental income for some tax relief.
- He could suffer capital gains tax on a future sale.
- The property will not form part of his estate for IHT purposes.
- The rate of stamp duty land tax is 3% above standard stamp duty rates.
- How is the cover provided under a whole of life policy affected if premiums cease at a stated age?
- It remains in force for a maximum period of 10 years
- It reduces to 50% when premiums cease
- It reduces by a stated percentage in each future year
- It is not affected – the cover continues until death
- B – See R01 Study Text, Chp 2
Grab our taster mock exam paper for CII R01. Click here to download.
- BC – See R02 Study Text, Chp 6:1
Grab our taster mock exam paper for CII R02. Click here to download.
- A – See R03 Study Text, Chp 3
Grab our taster mock exam paper for CII R03. Click here to download.
- ABD – See R04 Study Text, Chp 8
Grab our taster mock exam paper for CII R04. Click here to download.
- D – See R05 Study Text, Chp 4
Grab our taster mock exam paper for CII R05. 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?
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