Friday Five Focus on Taxation – 16 April – 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 2020/21, examinable by the CII until 31 August 2021. They do not relate to tax year 2021/22 which is only examinable by the CII from 1 September 2021

1. For this tax year, Sharon has made gross pension contributions of £20,000. She has a share of partnership profits of £100,000 and paid interest of £60,000 on a loan taken out to finance the partnership. How much of the loan interest can be deducted for tax relief purposes?
   1. £20,000
   2. £30,000
   3. £50,000
   4. £60,000

2. As a financial adviser, which of the following individuals would you advise if possible, to pay Class 3 National Insurance Contributions? Tick all that apply.
   1. Jane, who took early retirement at 50 having established 32 years of NICs
   2. Peter, aged 67, with an inadequate NIC record to qualify for a full State pension
   3. Hayley, who is moving to Portugal for a year, after selling the UK based business she owned for 10 years
   4. Mary, who has an incomplete NIC record after taking the last 2 years off to study

3. Simon makes a £7,500 contribution to his employer in respect of his new company car. How will this be treated when calculating the taxable benefit?
   1. £7,500 will be deducted from the list price.
   2. £5,000 will be deducted from the list price.
   3. The contribution is ignored in the calculation.
   4. The first £2,500 of the contribution is deducted.

4. Stuart owed a balancing tax payment of £10,000 on 31st January 2021. In March 2021, he still had not paid it. What penalty will HMRC charge Stuart?
   1. £250
   2. £500
   3. £750
   4. £1,000

5. Which of the following would be liable for CGT on their worldwide investment gains? Tick all that apply.
   1. Amy, a UK resident and UK domicile
   2. Ben, a permanent non-UK resident but UK domiciled
   3. Charles, a non-UK domicile and UK resident not using the remittance basis
   4. Edward, a non-UK domicile and UK temporary non-resident

Answers

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

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

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

4. B – See R03 Study Text, Chp 6
   Grab our taster mock exam paper for CII R03 Click here to download.

5. ACD – 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.