Friday Five – 3 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.

Questions

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.

1. How do good business ethics make good business sense?
   1. By demonstrating an awareness of ethical investments, a firm displays the breadth of their knowledge
   2. Good business ethics usually translates into wealthier customers being attracted to the firm
   3. A strong ethical culture helps build trust and confidence among consumers increasing their engagement with firms and products
   4. Good business ethics always leads to higher rates of commission

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. Sue is a basic rate taxpayer and David is a higher rate taxpayer. They have recently invested in the following:
    

   Name	Type	Investment	Current Value
   Sue	Venture Capital Trust	£50,000	£60,000
   David	Enterprise Investment Scheme	£50,000	£29,000

    
   From this information, you can advise Sue and David that:
   1. Sue received more tax relief on her investment than David
   2. only the dividends on David’s investment are tax free up to £200,000
   3. only David could have deferred capital gains by reinvesting in EIS shares
   4. Sue must retain her shares for 5 years to enjoy CGT exemption

4. To qualify as a QROPS the scheme must be established in a country which:
   1. agrees to implement the same pension regulations that apply in the UK.
   2. has a double taxation agreement in place with the UK
   3. agrees not to impose any pension flexibility.
   4. is outside the UK and notifies HMRC annually that the scheme meets the required conditions to be a QROPS.

5. Income Protection is likely to be a higher priority than Critical Illness cover for most people because:
   1. It has a shorter deferred period
   2. It allows higher sums assured
   3. It covers significantly more medical conditions
   4. It pays the benefits tax free

Answers

1. C – See R01 Study Text, Chp 10
   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 10
   Grab our taster mock exam paper for CII R03. Click here to download.

4. B – See R04 Study Text, Chp 2:2
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See R05 Study Text, Chp 7
   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?

If you found this quiz useful for your CII exam revision, please do share it with your colleagues.