Friday Five Focus on Taxation – 5 Questions in 5 Minutes – 12 Jun 2026

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 2025/26, examinable by the CII until 31 August 2026. They do not relate to tax year 2026/27 which is only examinable by the CII from 1 September 2026.

1. Hannah has started a hairdressing business with anticipated earnings for the first year of £6,500. Regarding her position in relation to National Insurance contributions it is true to say that she must
   1. apply for a certificate of exemption from class 2 contributions.
   2. advise HM Revenue & Customs that her earnings are expected to be below the small profits threshold.
   3. decide for herself whether to pay class 2 contributions assuming her profits stay below £6,845.
   4. pay the class 4 weekly flat rate contribution of £3.50.

2. Maureen has an asset that is worth so little that it qualified for a ‘negligible value claim’ on 1 September 2023. She now wants to backdate a claim for the loss she’s made to that tax year. Which of the following dates is the deadline for her to backdate the claim to 2023/24?
   1. 5 April 2025.
   2. 30 July 2025.
   3. 30 January 2026.
   4. 5 April 2026.

3. Which of the following would normally be included as a taxable benefit for an employee?
   1. Premiums on a group income protection scheme paid by the employer.
   2. A single mobile phone.
   3. Accommodation supplied by the employer for a low rent.
   4. A £5 weekly allowance for someone who works from home.

4. Caroline’s earnings are £80,000. She pays £8,000 into a personal pension each year. Her husband Tom no longer works but cares for the children claiming Child Benefit of £2,251 a year (rounded down). Which of the following statements is correct?
   1. Tom claims Child Benefit so he pays the High Income Child Benefit tax charge.
   2. The couple would be financially better off not claiming Child Benefit.
   3. The High Income Child Benefit tax charge in this scenario is £1,125.
   4. The High Income Child Benefit tax charge in this scenario is £2,251.

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 2; Rationale: Where a self-employed person’s profits are below the small profits threshold of £6,845, there is no obligation to pay class 2 NICs. Hannah can do so voluntarily if she wishes.
2. D; See R03 Study Text, Chp 12; Rationale: Negligible value claims can be backdated to either of the two tax years before the year in which the claim was made. The time limit for Maureen to backdate a claim to the 2023/24 tax year is therefore 5 April 2026.
3. C; See R03 Study Text, Chp 1; Rationale: Rent-free or low rent accommodation supplied by an employer is usually classed as a taxable employee benefit, unless an exemption applies. Premiums on a group income protection scheme paid for by the employer are exempt, as is a single mobile phone. There is, in fact, a £6 weekly allowance for someone who works from home, so £5 would be exempt.
4. C; See R03 Study Text, Chp 1; Rationale: The tax charge falls on the higher earner, rather than the claimant. That would appear to be Caroline in this case, not Tom. To work out Caroline’s tax charge, we gross up her personal pension payment (£8,000 / 0.8 = £10,000) and deduct that from her earnings of £80,000. Her income exceeds the £60,000 threshold by £10,000. She will therefore pay a 50% charge on the Child Benefit received. £2,251/2 = £1,125 (rounded down). As only half the Child Benefit is payable in tax, the couple would not be financially better off by not making a claim.
5. C; See R03 Study Text, Chp 1; Rationale: While premiums paid by an employer for private medical insurance are usually taxable, those paid for group income protection are not. Where employers pay for indemnity insurance for directors or employees, the payment is not a taxable benefit and nor is the provision of one mobile phone.

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