Friday Five Focus on Taxation – 6 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 2022/23, examinable by the CII until 31 August 2023.

1. Yared is considering investing in a single premium investment bond. As a basic rate taxpayer, he should be aware that: Tick all that apply.
   1. he can withdraw up to 5% of the original capital each year without triggering a chargeable event.
   2. he can reclaim the basic rate tax suffered by the life fund.
   3. any gain he makes in the future could potentially be liable to Capital Gains Tax.
   4. he can assign the policy to his spouse, although that would be a chargeable event.
   5. he can use top slicing on any future chargeable gain calculation.

2. Andrew is a self-employed plumber and for the first time is going to complete his tax return online. He wants to know when the deadline is for submitting this to HMRC for the 2022/23 tax year. You tell him that the filing date is the:
   1. 31 October 2023.
   2. 30 December 2023.
   3. 31 January 2024.
   4. 31 January 2025.

3. Sandy and Brian are carrying out Inheritance Tax mitigation and are keen to use the ‘normal expenditure out of income’ exemption. Which of the following is most likely to qualify?
   1. Paying net annual premiums of up to £2,880 into a personal pension for their son from spare income.
   2. Paying a £45,000 deposit on a house purchase for their daughter.
   3. Using the 5% withdrawal facility from an investment bond to pay the premiums on a joint life 2nd death life policy.
   4. Transferring their income producing investment portfolio to both children.

4. Stuart owed a balancing tax payment of £10,000 on 31st January 2023. In late March 2023, he still had not paid it. What penalty will HMRC usually charge Stuart?
   1. £250
   2. £500
   3. £750
   4. £1,000

5. Sarah is NOT registered for VAT but realises on the 1st May 2022 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. AE – See R03 Study Text, Chp 10
   Grab our taster mock exam paper for CII R03. Click here to download.

2. C – See R03 Study Text, Chp 6
   Grab our taster mock exam paper for CII R03. Click here to download.

3. A – See R03 Study Text, Chp 11
   Grab our taster mock exam paper for CII R03. Click here to download.

4. B – See R03 Study Text, Chp 6
   Grab our taster mock exam paper for CII R03 Click here to download.

5. 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.