Friday Five Focus on Taxation – 8 October – 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 2021/22, examinable by the CII until 31 August 2022.

1. Maureen has an asset that is worth so little that it qualified for a ‘negligible value claim’ on 1 September 2019. 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 2019/20?
   1. 5 April 2021
   2. 30 July 2021
   3. 30 January 2022
   4. 5 April 2022

2. Samantha has an offshore bond and her friend Julia has an onshore bond. They have asked you to explain some of the features of both products. You can tell them that: Tick all that apply.
   1. only onshore bonds benefit from ‘time apportionment relief’.
   2. only offshore bonds benefit from gross roll up.
   3. both products benefit from top slicing relief.
   4. offshore bonds are better protected in the event of the company failing.

3. Frankie is looking to mitigate her Inheritance Tax situation and has made a start by using her annual exemption for this tax year. She should be aware that: Tick all that apply.
   1. she can use her annual exemption from last tax year if she hasn’t done so already.
   2. any gift she makes now and, in the future, will qualify for taper relief.
   3. if she makes a gift, it will be effective for IHT even if she retains a benefit from it.
   4. a non-exempt gift into a discretionary trust will be a chargeable lifetime transfer (CLT).

4. Mr Sloane has created six trusts, one of which has made a gain of £10,000 on the sale of an investment. What is the annual exempt amount for capital gains tax that can be used against this gain?
   1. £12,300
   2. £6,150
   3. £1,230
   4. £1,000

5. Simon is a higher rate taxpayer. Four years ago, he invested in an Enterprise Investment Scheme and received income tax relief on his investment at that time. He now wishes to sell the shares. Which of the following is correct regarding his most likely capital gains tax (CGT) position?
   1. If the income tax relief was not withdrawn, he will pay CGT at 10%
   2. He received income tax relief so will pay CGT at 20%
   3. He has held the shares for over 3 years so will not suffer CGT
   4. He will be exempt from CGT on 50% of gains and will pay 20% on the balance

Answers

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

2. BC – See R03 Study Text, Chp 10
   Grab our taster mock exam paper for CII R03. Click here to download.

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

4. C – 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 12
   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.