Friday Five Focus on Taxation – 17 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 2023/24, examinable by the CII until 31 August 2024.

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? (Select 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. Which of these statements regarding local authority and corporate bonds is true?
   1. Corporate bonds pay interest net of 20% tax.
   2. Only interest received from a local authority bond is fully taxable as savings income.
   3. If a local authority bond is bought at issue and held to maturity, the capital should be repaid.
   4. A corporate bond pays interest for an open-ended period.

4. 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.

5. Which of the following would be liable for CGT on their worldwide investment gains? (Select 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. C – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03. Click here to download.

4. B – See R03 Study Text, Chp 5
   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.