Friday Five – 28 August – 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 2019/20, examinable by the CII until 31 August 2020. They do not relate to tax year 2020/21 which is only examinable by the CII from 1 September 2020.

1. Which of the following are NOT classed as pure protection policies? Tick all that apply.
   1. Unemployment cover
   2. Income protection
   3. Term assurance
   4. Endowment

2. A retail client is interested in investing in lump sum life assurance bonds; you can tell them that: Tick all that apply.
   1. most are written as whole of life policies with no specific maturity date.
   2. life cover is usually just in excess of the value of the fund on death.
   3. any regular withdrawals are considered to be a return of capital.
   4. because they are lump sum investments they are classed as qualifying policies.

3. Mavis is considering investing in a single premium investment bond. As a basic rate taxpayer, she should be aware that: Tick all that apply.
   1. she can withdraw up to 5% of the original capital each year without triggering a chargeable event
   2. she can reclaim the basic rate tax suffered by the life fund
   3. any gain she makes in the future could potentially be liable to capital gains tax
   4. she can assign the policy to her spouse without it causing a chargeable event
   5. she can use top slicing on any future chargeable gain calculation

4. Which of the following is true regarding recycling excess pension income as further pension contributions? Tick all that apply.
   1. This will fall foul of the recycling anti-avoidance provisions.
   2. It could increase lump sum death benefits if the client doesn’t have lifetime allowance issues.
   3. It creates a further source of pension commencement lump sum (PCLS).
   4. Recycling anti-avoidance provisions only apply to a PCLS.

5. David owns a house which he has been using 50% for business purposes. Which tax will he need to take account of when he is selling the property?
   1. Income Tax
   2. Value Added Tax
   3. Capital Gains Tax
   4. Inheritance Tax

Answers

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

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

3. ADE – See R03 Study Text, Chp 10
   Grab our taster mock exam paper for CII R03. Click here to download.

4. BCD – See R04 Study Text, Chp 8
   Grab our taster mock exam paper for CII R04 Click here to download.

5. C – See ER1 Study Text, Chp 7
   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?

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