Friday Five – 31 March – 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

These questions relate to examinable tax year 2016/17, examinable until 31 August 2017.

1. What does Part 4A permission as set out by the FSMA refer to?
   1. Where a partnership is allowed to remain authorised in the event of one partner’s death
   2. A firm wishing to change its legal status e.g. from a partnership to a limited company
   3. The public record of all the successful FCA authorisation applications in the past year
   4. Applying to the FCA for direct authorisation to allow the firm to carry out the regulated activities they have applied for

2. A Bond is trading below its par value, what might cause this?
   1. Interest rates have reduced sharply
   2. The coupon is below current interest rates
   3. The coupon is above current interest rates
   4. The issuer has a strong credit rating

3. Maggie and John Brown are reviewing their wills and contemplating including a trust for ‘bereaved minors’ as they have 12-month-old twin daughters. Which of the following should they be made aware of regarding this type of trust?
   1. They are subject to an exit charge at age 18
   2. They are subject to a 10 yearly periodic charge
   3. They must give an absolute interest at age 18
   4. They must give an interest in possession at age 18

4. Gloria has given up work to look after her aged mother, who is in receipt of full rate Attendance Allowance, on a full-time basis. Which benefit may Gloria be eligible to claim?
   1. Disability Living Allowance
   2. Personal Independence Payment
   3. Job Seeker’s Allowance
   4. Carer’s allowance

5. Bob, aged 68, died in July 2014 while in capped drawdown. His wife Joan chose to continue in capped drawdown, and is taxed on at her marginal rate of income tax on the regular income she withdraws. What can she do in 2016/17 that will make the income she receives tax-free?
   1. There is nothing she can do to make the income tax-free.
   2. She can swap her dependant’s capped drawdown arrangement for a dependant’s flexi-access drawdown.
   3. She can swap her dependant’s capped drawdown arrangement for a dependant’s lifetime annuity.
   4. She can apply to have the maximum GAD income re-calculated which will allow the income to be tax-free from the start of the next scheme year.

Answers

1. D – See R01 Study Text, Chp 6
   Grab our taster mock exam paper for CII R01. Click here to download.

2. B – See R02 Study Text, Chp 1:1
   Grab our taster mock exam paper for CII R02. Click here to download.

3. C – See R03 Study Text, Chp 4
   Grab our taster mock exam paper for CII R03. Click here to download.

4. D – See ER1 Study Text, Chp 7
   Grab our taster mock exam paper for CII ER1. Click here to download.

5. A – See R08 Study Text, Chp 1
   Grab our taster mock exam paper for CII R08. 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!)