Friday Five Focus on Taxation – 5 Questions in 5 Minutes – 16 Aug 2024

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. They do not relate to tax year 2024/25 which is only examinable by the CII from 1 September 2024.

1. Alex has bought £5,400 worth of shares through an online platform provider. He should be aware that he will be 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.

2. Jason has a holding of corporate bonds and his friend Michael has a holding of gilts. When considering the differences in their investments, it is true to say that
   1. only corporate bonds are exempt from Capital Gains Tax on any profit arising from a sale.
   2. only the interest from corporate bonds is taxable as savings income.
   3. only the interest from corporate bonds is always paid gross.
   4. only corporate bonds can be traded on the stock market.

3. Maureen, a higher-rate taxpayer, bought a limited-edition print in May 2010 for £2,500. She sold it in June 2023 for £6,250. In September 2023, she subsequently sold a second print for £14,000. This had been purchased in July 2011 for £5,000. What is Maureen’s Capital Gains Tax liability in 2023/24?
   1. £0
   2. £341.67
   3. £683.33
   4. £950.00

4. Majestic plc pays a dividend of £270 each to two brothers, Jason and Miles. Jason is a higher-rate taxpayer and Miles is an additional-rate taxpayer. Which of the following is correct regarding their Income Tax liabilities?
   1. Jason will pay tax at 8.75% once he has used up his dividend allowance.
   2. As an additional-rate taxpayer Miles is not entitled to the dividend allowance.
   3. Assuming he has not used his dividend allowance, Miles has no tax to pay.
   4. Assuming he has used his dividend allowance, Jason has a liability of £87.75.

5. The accounts for a public limited company have been prepared for a 16-month period ending 31 January 2024. According to HM Revenue & Customs, on what basis will Corporation Tax be charged?
   1. There will be one 16-month long accounting period.
   2. There will be a 12-month accounting period to 30 September 2023, and a 4-month accounting period to 31 January 2024.
   3. There will be a 4-month accounting period to 31 January 2023 and a 12-month accounting period to 31 January 2024.
   4. There will be 2 accounting periods which will end on 5 April 2023 and 5 April 2024 respectively.

Answers

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

2. C – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03. Click here to download.

3. C – See R03 Study Text, Chp 12
   Grab our taster mock exam paper for CII R03. Click here to download.

4. C – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03 Click here to download.

5. B – 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?

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