Friday Five Focus on Taxation – 10 February – 5 Questions in 5 Minutes

Friday Five Focus on Taxation – 5 Questions in 5 Minutes Every Friday

What’s this all about?

Each week, we ask questions relating to one of these topics: Investments, Taxation, Pensions, Protection, or Regulation. This week, our Friday Five is relevant to Taxation; this is useful as you prepare for the CII’s R03 or AF1 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 2022/23, examinable by the CII until 31 August 2023.

1. Sam is self-employed and in his VAT return has reported output VAT of £10,000 and input VAT of £6,000. How much VAT will Sam either owe HMRC or be able to reclaim?
   1. He will owe £1,000.
   2. He will owe £800.
   3. He can reclaim £1,000.
   4. He can reclaim £800.

2. Simon makes payments to his occupational pension scheme by deduction from his pay. What is this method known as?
   1. Net pay arrangement.
   2. Relief at source.
   3. Gross pay arrangement.
   4. Relief by claim.

3. David transferred ownership of his share portfolio to his son realising a gain on which he paid Capital Gains Tax (CGT). Four years later David died, what tax, if any, is now due?
   1. His son faces a potential CGT charge on the difference between the value at which he acquired the asset and the market value at David’s death.
   2. As a failed PET, there is a potential IHT charge with no credit given for the CGT paid on the earlier transfer.
   3. There would be no further charge due to the CGT paid on the earlier transfer.
   4. There may be an IHT charge, but relief would be given for the CGT paid.

4. Cleo, a first-time buyer, buys a flat in England on 1 December 2022 for £252,950. How much Stamp Duty Land Tax (SDLT) will be payable?
   1. Nil
   2. £59.00
   3. £147.50
   4. £2,559.00

5. Paul has recently taken out an investment bond and wants to know if he will be subject to Income Tax on any gain that is made. Which of the following do you need to explain to him is a chargeable event under a non-qualifying life policy? Tick all that apply.
   1. Surrender.
   2. Assignment for money’s worth.
   3. Assignment between spouses.
   4. Payment of a critical illness benefit.

Answers

1. B – See R03 Study Text, Chp 8
   Grab our taster mock exam paper for CII R03. Click here to download.

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

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

4. A – See R03 Study Text, Chp 7
   Grab our taster mock exam paper for CII R03 Click here to download.

5. AB – See R03 Study Text, Chp 10
   Grab our taster mock exam paper for CII R03. 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.