Friday Five Focus on Taxation – 12 November – 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 2021/22, examinable by the CII until 31 August 2022.

1. Lynne and her husband are considering letting a room in their house. Which of the following is true regarding letting rooms in their main residence? Tick all that apply.
   1. Where gross rent in a year is not more than £7,500, they will not be charged to tax.
   2. Rent a room relief will not apply if the accommodation is unfurnished.
   3. Rent a room relief is automatic.
   4. Lynne and her husband can both claim rent a room relief of £7,500.
   5. They can let the room for business purposes and claim rent a room relief.

2. Assuming all of the following individuals are UK-resident but non-UK domiciled, which of them could claim the remittance basis without having to pay the annual tax charge? Tick all that apply.
   1. Sarah who is aged 20
   2. Claire who has been resident in the UK for 5 out of the last 9 years
   3. Alex who is aged 16
   4. Leo who has unremitted overseas income for the year of £3,000
   5. Duncan who has unremitted overseas income for the year of £1,800

3. Florence has recently become self-employed. She is aware that she will have to pay National Insurance contributions but wants to know how. You tell her that:
   1. Class 2 and class 4 are normally paid by monthly direct debit.
   2. Class 2 is included with the income tax self-assessment and class 4 is normally paid by monthly direct debit.
   3. Class 2 and class 4 are both accounted for under self-assessment.
   4. Class 2 is normally paid by monthly direct debit and class 4 is included with the income tax self-assessment.

4. Ben has recently died having run his landscape gardening business as a sole trader for 15 years. He has left the business with a value of £500,000 to his son Charlie. Which of the following is true regarding the IHT position on Ben’s business?
   1. Agricultural relief can be claimed at 50%
   2. Business relief can be claimed at 50%
   3. Agricultural relief can be claimed at 100%
   4. Business relief can be claimed at 100%

5. Joseph has been asked to be a trustee of a trust where there is no interest in possession. He has asked you what the implications of this are. You can tell him that: Tick all that apply.
   1. These trusts are usually known as bare trusts
   2. There is no requirement for him to pay income to any particular beneficiary
   3. A transfer into this type of trust is a potentially exempt transfer
   4. If a beneficiary dies, there is no charge to IHT on their estate
   5. The death of a beneficiary would trigger a potential IHT charge

Answers

1. ABC – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03. Click here to download.

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

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

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

5. BD – See R03 Study Text, Chp 4
   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.