Friday Five Focus on Taxation – 5 Questions in 5 Minutes – 3 Apr 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.

1. Of the following individuals, who would be eligible to make a pension contribution and receive full Income Tax relief?
   1. Alex, aged 78, wishing to make a single gross contribution of £3,600.
   2. Leo, who earns £25,000 per annum wishing to make a single gross contribution of £20,000.
   3. Steve, who has never previously contributed to a pension, wishes to make a single contribution of £45,000, his earnings last year were £52,000 but have fallen this year to £38,000.
   4. Alison, a full-time homemaker who wishes to make regular monthly gross contributions of £420.

2. Geraldine died in the 2004/2005 tax year using 40% of the then standard nil rate band for Inheritance Tax of £263,000. If her husband dies in this tax year, how much standard nil rate band can be applied for by his personal representatives?
   1. £325,000
   2. £430,200
   3. £482,800
   4. £520,000

3. Jack is an employee and has noticed on his pay slip that he has a PAYE code of 543L. Which of the following is the correct explanation of what this means?
   1. £453.25 will not be taxed each month.
   2. £543.00 will be taxed each month.
   3. £543.00 will not be taxed each month.
   4. £453.25 will be taxed each month.

4. Fred and Nancy have a Child Trust Fund for their 11-year-old daughter as well as holding a Cash ISA and a Stocks and Shares ISA. They are looking around for better providers and have asked you for advice as to the type of transfer they can do. It is correct to say that the transfer they could not do is the
   1. Child Trust Fund to a Cash ISA.
   2. Child Trust Fund to a Junior ISA.
   3. Stocks & Shares ISA to a Cash ISA.
   4. Cash ISA to another Cash ISA.

5. What do promoters of tax avoidance schemes receive from HM Revenue & Customs 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. B; See R03 Study Text, Chp 1; Rationale: Leo’s contribution is below 100% of his earnings. He will therefore receive full tax relief on it. Alex is over 75 and therefore is not eligible for tax relief. Steve’s desired contribution is in excess of 100% of his earnings and he cannot use carry forward because he has not previously contributed to a pension. Alison’s gross annual contribution is in excess of £3,600 which is the maximum amount on which tax relief can be received for a non-earner.
2. D; See R03 Study Text, Chp 4; Rationale: Geraldine’s husband’s legal personal representatives can apply for his standard nil rate band of £325,000, plus Geraldine’s unused standard nil rate band at 60% of £325,000 = £195,000, giving a combined standard nil rate band total of £520,000.
3. A; See R03 Study Text, Chp 6; Rationale: A PAYE code of 543L means that £5,439 / 12 = £453.25 will not be subject to tax each month. (The final digit is always deemed to be a 9 so 543L becomes £5,439).
4. A; See R03 Study Text, Chp 10; Rationale: Savings in a Child Trust Fund can be transferred to a Junior ISA, but not a cash ISA. Both stocks & shares and cash ISAs can be transferred to other cash ISAs.
5. A; See R03 Study Text, Chp 11; Rationale: Once a promoter of a tax avoidance scheme has had the scheme registered with HMRC, they will be issued with a reference number that users of the scheme can quote on their self assessment return.

Grab the resources you need!

R03 questions often come down to applying the rules correctly and avoiding small but costly errors. If you’d like to see how our full R03 E-Mocks present these topics in an exam setting, get access to the free R03 E-Mocks taster to preview the question style, layout and level of detail included in the complete set.

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