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Friday Five Focus on Taxation – 21 January – 5 Questions in 5 Minutes

Friday Five Focus on Taxation – 21 January – 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. Alex has recently bought £5,400 worth of shares through an online platform provider. Which of the following is he liable for?
    1. Stamp duty of £30
    2. Stamp duty of £27
    3. Stamp duty reserve tax of £30
    4. Stamp duty reserve tax of £27
  1. How does Jane receive basic rate tax relief on her individual personal pension contribution?
    1. She must claim the tax relief back via self-assessment.
    2. She receives basic rate tax relief at source.
    3. She makes a gross payment and tax relief is deducted from her total income.
    4. She is only entitled to tax relief if payments are made via her employer’s payroll.
  1. Edward is a company director and is considering the best way of taking remuneration from his company. What might be a disadvantage for him of taking a low salary and high dividends?
    1. Dividends are not relevant earnings and so could restrict pension contributions.
    2. Corporation tax would be payable at a higher rate as the salary is not being withdrawn from company profits
    3. A reduced salary would reduce any State pension entitlement in the future.
    4. The dividend payment would be subject to a higher rate of National Insurance.
  1. Stuart owed a balancing tax payment of £10,000 on 31st January 2022. In March 2022, he still had not paid it. What penalty will HMRC usually charge Stuart?
    1. £250
    2. £500
    3. £750
    4. £1,000
  1. Sarah is NOT registered for VAT but realises on the 1st May 2021 that sales for May will be in the region of £87,000. Which of the following is true regarding VAT registration? Tick all that apply.
    1. She must inform HMRC before the 30th May
    2. Once she has informed HMRC she will be VAT registered from the 1st May
    3. If she doesn’t notify HMRC she may be charged a penalty
    4. Once she has informed HMRC she will be VAT registered from the 1st June.

 

Answers

  1. D – See R03 Study Text, Chp 7
    Grab our taster mock exam paper for CII R03. Click here to download.
  1. B – See R03 Study Text, Chp 1
    Grab our taster mock exam paper for CII R03. Click here to download.
  1. A – See R03 Study Text, Chp 11
    Grab our taster mock exam paper for CII R03. Click here to download.
  1. B – See R03 Study Text, Chp 6
    Grab our taster mock exam paper for CII R03 Click here to download.
  1. ABC – See R03 Study Text, Chp 8
    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.

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