Friday Five Focus on Taxation – 14 June – 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. Georgia spends from 1 December to 31 March in her house in Spain and returns to the UK for the rest of the time. She is likely to be treated by HM Revenue & Customs for residence purposes
   1. as automatically not resident in the UK.
   2. as automatically resident in the UK.
   3. according to the split year rules.
   4. according to the sufficient UK ties test.

2. Which of the following is most likely to be classed as a gift with reservation for Inheritance Tax purposes by HM Revenue & Customs?
   1. Stan gives away his rental home but often stays there paying full market rent.
   2. Elaine gives away her antique jewellery to her daughter but cleans it annually.
   3. Edmond gives his son his share portfolio but retains the right to dividends from it.
   4. Andrea gives a painting to her brother who hangs it in his own sitting room.

3. When considering the use of the transferable nil rate band for Inheritance Tax purposes, individuals should be aware that it
   1. must be claimed on the second death.
   2. will not be available if the surviving spouse has re-married.
   3. can only be increased on second death by a maximum of 200%.
   4. is only available if the first death occurred after 2007.

4. Tamsin made a transfer of £150,000 to a discretionary trust and four years later made a Potentially Exempt Transfer of £325,000. She dies six and a half years later. All other gifts were covered by the annual allowance. Assuming she had used her annual exemptions elsewhere what is the Inheritance Tax liability?
   1. Nil
   2. £12,000
   3. £24,000
   4. £60,000

5. Stuart owed a balancing Income Tax payment of £10,000 on 31st January 2024. In late March 2024, he still had not paid it. The penalty that HM Revenue & Customs are able to charge Stuart is
   1. £250
   2. £500
   3. £750
   4. £1,000

Answers

1. B – See R03 Study Text, Chp 5
   Grab our taster mock exam paper for CII R03. Click here to download.

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

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

4. B – 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 6
   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.