Friday Five – 3 July 2015 – 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.
These questions relate to examinable tax year 2014/15, examinable until 31 August 2015.
- What is the difference between a lifetime mortgage and a home reversion scheme?
- Monthly payments are typically lower under a home reversion scheme
- Under a home reversion scheme you sell all or part of your home, but under a lifetime mortgage you take out a loan secured on your home
- You can borrow a higher percentage of the value of your home under a lifetime mortgage
- Ownership of the home is retained by the client under a lifetime mortgage, but not under a home reversion scheme
- Which type of risk cannot be eliminated?
- Investment specific
- Company specific
- Paul is a beneficiary under the family Interest in Possession trust. He has a personal income of £153,000 and has recently also received £2,000 income generated from one of the trust’s building society investments. What is Paul’s Income tax liability on this income?
- His liability is 40% of the gross income of £2,500
- He has no liability as the trustees are responsible for any Income tax
- His liability is 45% of £2,500 less the 20% tax deducted at source
- He has no liability as 20% income tax has been deducted at source
- In the event of death when the member has crystallised funds under a drawdown pension, in relation to the death benefits: – tick all that apply
- The dependant can continue drawdown pension.
- The fund can be returned less a 35% tax charge.
- The fund can be returned less a 55% tax charge.
- The dependant may be able to purchase a scheme pension.
- The whole of the non-protected rights element can be returned free of tax.
- Matthew has surrendered an offshore life assurance policy. What rate, or rates, of income tax will he be liable for on any chargeable gain?
- Higher or additional rates only
- Basic rate only
- Basic rate, higher rate or additional rate
- Any gain will be free of income tax
- B – See R01 Study Text, Chp 2 Section B2D
Grab our taster mock exam paper for CII R01. Click here to download.
- B – See J10 Study Text, Chp 3 Section A
Grab out taster mock exam paper for CII J10. Click here to download.
- C – See R03 Study Text, Chp 1 Section K4B
Grab our taster mock exam paper for CII R03. Click here to download.
- ACD – See R04 Study Text, Chp 6.2 Section E2A
Grab our taster mock exam paper for CII R04. Click here to download.
- C – See R05 Study Text, Chp 5 Section B1
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?
Do let us know by leaving a comment below – we promise to read them all. (Humour particularly appreciated on a Friday!)