Friday Five Focus on Taxation – 26 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 2023/24, examinable by the CII until 31 August 2024.

1. John, a sole trader, starts a business on 1 August 2023, making up accounts to 31 July. His profits will be taxed for 2023/24 on the
   1. current-year basis.
   2. transitional year basis.
   3. tax-year basis.
   4. assessment basis.

2. If Pauline incurred a capital gain on the sale of some shares on 4 May 2023, when would the CGT liability have to be paid by at the latest?
   1. 31 January 2025
   2. 31 January 2024
   3. 30 October 2024
   4. 30 October 2023

3. Maurice placed a life policy into trust on 1 January 2021. He died on 18 October 2023 and a chargeable event occurred on the life policy on 17 May 2024. The trustees and the beneficiaries of the trust are all UK resident. Who is liable for the resulting tax on the chargeable gain?
   1. Maurice’s executors.
   2. Maurice’s trustees.
   3. Maurice’s beneficiaries.
   4. No-one as the settlor, Maurice, is dead.

4. The trustees of a family trust have recently bought a house with trust funds and will allow the beneficiary to live in it as their main residence. For Capital Gains Tax (CGT) purposes HMRC will only allow them to claim the principal private residence
   1. the beneficiary has an interest in possession.
   2. holdover relief was claimed on the transfer of the property to the trust.
   3. the trust is held on a discretionary basis.
   4. the beneficiary has an absolute interest.

5. Which of the following is a taxable benefit for employees?
   1. Liability insurance.
   2. Group income protection.
   3. Private medical insurance.
   4. A mobile phone.

Answers

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

2. A – 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 10
   Grab our taster mock exam paper for CII R03. Click here to download.

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

5. C – See R03 Study Text, Chp 1
   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.