Friday Five Focus on Taxation – 18 December – 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.

1. 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%

2. Joanne sold an investment property to her sister at market value of £120,000 making a gain of £40,000. She has allowed her sister two years to pay for the house. When would Joanne be liable to pay any Capital Gains Tax (CGT)?
   1. Joanne must pay any CGT based on the contract date.
   2. Joanne must pay any CGT when she receives the money from her sister.
   3. There would be no CGT liability as Joanne has sold to a close relative.
   4. Joanne must pay any CGT based on the contract date but can pay in instalments.

3. Sally has a holiday home in Cornwall that she is now considering letting out commercially. To gain certain tax advantages, it must qualify as a ‘furnished holiday let’ which means that:
   1. it must be in an acknowledged holiday resort.
   2. it must be available for commercial let for at least 210 days in total in a tax year.
   3. it must be actually let for at least 90 days in total in a tax year.
   4. the tenants occupying the property must be on holiday.

4. A first-time buyer buys a flat in England for £127,950. What Stamp Duty Land Tax (SDLT) will be payable?
   1. £0
   2. £59
   3. £1,279.50
   4. £2,559

5. What do promoters of tax avoidance schemes receive from HMRC in the event of their scheme being registered?
   1. A reference number
   2. A fixed penalty
   3. A 6-month timescale to wind up the scheme
   4. Sanctions to be used in all promotions

Answers

1. D – See R03 Study Text, Chp 3
   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. B – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03. Click here to download.

4. A – See R03 Study Text, Chp 7
   Grab our taster mock exam paper for CII R03 Click here to download.

5. A – See R03 Study Text, Chp 11
   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.