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.
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.
- How do good business ethics make good business sense?
- By demonstrating an awareness of ethical investments, a firm displays the breadth of their knowledge
- Good business ethics usually translates into wealthier customers being attracted to the firm
- A strong ethical culture helps build trust and confidence among consumers increasing their engagement with firms and products
- Good business ethics always leads to higher rates of commission
- 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?
- The 5% initial charge is taken from her ISA subscription
- She can pay the 5% charge separately to leave her full subscription intact
- She would be able to replace the initial charge with an early encashment penalty
- As a one-off fee it won’t apply to next year’s subscription
- 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:
- Sue received more tax relief on her investment than David
- only the dividends on David’s investment are tax free up to £200,000
- only David could have deferred capital gains by reinvesting in EIS shares
- Sue must retain her shares for 5 years to enjoy CGT exemption
- To qualify as a QROPS the scheme must be established in a country which:
- agrees to implement the same pension regulations that apply in the UK.
- has a double taxation agreement in place with the UK
- agrees not to impose any pension flexibility.
- is outside the UK and notifies HMRC annually that the scheme meets the required conditions to be a QROPS.
- Income Protection is likely to be a higher priority than Critical Illness cover for most people because:
- It has a shorter deferred period
- It allows higher sums assured
- It covers significantly more medical conditions
- It pays the benefits tax free
- C – See R01 Study Text, Chp 10
Grab our taster mock exam paper for CII R01. Click here to download.
- A – See R02 Study Text, Chp 6:2
Grab our taster mock exam paper for CII R02. Click here to download.
- C – See R03 Study Text, Chp 10
Grab our taster mock exam paper for CII R03. Click here to download.
- B – See R04 Study Text, Chp 2:2
Grab our taster mock exam paper for CII R04. Click here to download.
- 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?
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