Friday Five – 4 October – 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 2019/20, examinable until 31 August 2020.

1. What benefits could a building society member expect in the event of demutualisation?
   1. Lower interest rates on borrowings
   2. Higher interest rates on savings
   3. Increased product range
   4. Cash or shares in the new company

2. What effect (if any) would gearing have on a positive portfolio return?
   1. No effect
   2. Magnify the positive return
   3. Reduce the positive return
   4. Defer the positive return

3. Amanda is considering a future transfer of her son’s Child Trust Fund to a Junior ISA. She should be aware that: Tick all that apply.
   1. the tax position of the fund is the same for both products
   2. her son can withdraw the proceeds when he reaches 18
   3. payments are cumulative so can be made up in later years
   4. income generated of more than £100 will be taxed on her

4. Max is a client of yours who has always invested any surplus income in the stock market. He now wishes to set up a pension arrangement where he can continue to do this. Which of the following would be suitable for him?
   1. A self-invested personal pension.
   2. A small self-administered scheme.
   3. A retirement annuity contract.
   4. A Stakeholder plan or personal pension.

5. Arthur, an additional rate taxpayer, has purchased an immediate needs care plan to part-fund his domiciliary care costs. He has arranged for the benefits to be paid directly to him as he uses a number of care providers. How will the benefits be taxed?
   1. They will be treated as a withdrawal from the bond and there will be no tax if it does not exceed 5% per annum of the amount invested
   2. They will be liable to tax at the higher rate of 45%
   3. They will be tax free
   4. They will be liable to 25% tax

Answers

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

2. B – See R02 Study Text, Chp 5
   Grab our taster mock exam paper for CII R02. Click here to download.

3. AB – See R03 Study Text, Chp 12
   Grab our taster mock exam paper for CII R03. Click here to download.

4. A – See R04 Study Text, Chp 5
   Grab our taster mock exam paper for CII R04. Click here to download.

5. D – See R05 Study Text, Chp 5
   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.