Friday Five Focus on Taxation – 10 May – 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 2023/24, examinable by the CII until 31 August 2024. They do not relate to tax year 2024/25 which is only examinable by the CII from 1 September 2024.

1. In the event of a married couple both dying in a plane crash where it’s impossible to say who died first, it is true to say that general law assumes
   1. the older life died first and, for Inheritance Tax (IHT) purposes, it is assumed they died at the same time.
   2. the older life died first and this is also the presumption for IHT purposes.
   3. they both died at the same time and this is also the presumption for IHT purposes.
   4. they died at the same time, and for IHT purposes, it is presumed that the older life died first.

2. Johnny recently sold an antique vase making a net chargeable gain of £10,000 after deducting the annual exempt amount and allowable losses. What rate of tax will he be charged if his total taxable income is £20,000?
   1. 28%
   2. 20%
   3. 18%
   4. 10%

3. Elaine is a basic-rate taxpayer. She is also a beneficiary under a discretionary trust and has received net income of £1,650. Which of the following is correct regarding this income?
   1. Elaine is deemed to have received gross income of £3,000.
   2. The settlor of the trust will reclaim any tax on Elaine’s behalf.
   3. She has no further liability, but neither can she reclaim any tax.
   4. She will have a further liability less the amount taxed at source.

4. Amelia makes a transfer into a discretionary trust of £500,000 after exemptions for the benefit of her four grandchildren. What Inheritance Tax is now due on this transfer assuming the trustees pay the tax?
   1. £100,000
   2. £65,000
   3. £35,000
   4. Nil

5. Which of the following statements regarding the annual tax charge for non-domiciled persons is true?
   1. Paying the annual tax charge on unremitted foreign income and gains allows the individual to remit other income and gains with no further liability.
   2. An individual can elect to pay tax on their worldwide income and gains for a specific tax year to avoid the annual tax charge.
   3. The annual tax charge is £30,000 for adults resident in the UK for at least 12 tax years and who claim the remittance basis.
   4. The charge does not apply to unremitted income and gains of less than £3,000 in any tax year.

Answers

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

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

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

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

5. B – See R03 Study Text, Chp 5
   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.