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Try This R03 Question For Size

Try This R03 Question For Size

Are you thinking of furthering your financial services qualifications and sitting R03 ‘Personal Taxation’?  The CII’s R03 only gives you 10 credits towards the Diploma in Regulated Financial Planning, but our customers are clear that it is a tough exam requiring a wide knowledge of the subject area.  So this month we thought we’d provide some taster questions and answers for you:

1.    Bernard made a £14,000 loss in 2010/11, which of the following is he permitted to do?

A.    Use £4,000 of this loss against his £14,100 gain this year to allow him to use his full annual exemption and carry forward the remaining £10,000
B.    As he has no gains this year he can carry forward the loss to use in future years (using only sufficient loss to reduce the gain to his annual exemption)
C.    Use his £14,000 loss against his wife’s £16,000 gain this tax year
D.    Use the £4,000 loss he has carried forward from last year against this year’s gain to allow him to preserve the £14,000 loss for next year

2.    Which of the following statements regarding the £30,000 annual tax charge for non-domiciled persons is false?

A.    Paying the £30,000 tax charge on unremitted foreign income and gains will then allow the individual to remit other income and gains with no further liability
B.    Individuals can choose the unremitted foreign income on which the charge is treated as paid, if this income is subsequently remitted to the UK no further liability will arise
C.    An individual can elect to pay tax on their worldwide income / gains for a specific tax year to avoid the £30,000 charge
D.    The charge is only applicable for individuals who have lived in the UK for 7 out of the last 9 years, are over 18 and claiming the remittance basis

3.    Why does CGT produce comparatively low revenue for the government?

A.    Because CGT allowances are generally used effectively
B.    Because investors do not realise gains
C.    Because capital gains are extinguished on death
D.    Because of the prominence of CGT efficient investment vehicles

For this last question, more than one option is correct.  Select all the correct options.

4.    What strategies might be considered for someone wishing to make lifetime gifts? Tick all that apply

A.    Make gifts into discretionary trusts within the £325,000 limit
B.    Make outright gifts
C.    Make gifts into bare trusts
D.    Make as many gifts as possible within the 7 year time rule
E.    Make disposals to realise chargeable gains before placing into trust
F.    Retain appreciating assets (do not place into trust)

1.    B  (CII R03 study text cross reference Chapter 3, Section D4)
2.    A  (CII R03 study text cross reference Chapter 5, Section E2)
3.    C  (CII R03 study text cross reference Chapter 12, Section B2G)
4.    ABC  (CII R03 study text cross reference Chapter 11, Section E2F)

How did you get on?  You can find out more about our R03 learning resources including mock papers, calculation workbook and study notes by visiting us at