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Try This R03 Question For Size

Try This R03 Question For Size

The CII’s R03 exam only gives you 10 credits towards the Diploma in Regulated Financial Planning and yet over the past few years R03 has had the lowest pass rate out of all the R0 exams. 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:

THIS ARTICLE IS RELEVANT TO EXAMINABLE TAX YEAR 2019/20.

1. Natalie is a company director and is paid a flat fee of £20,000. How is her National Insurance calculated?

A.  By averaging her earnings over the last 3 years and applying the appropriate rates on a monthly basis

B . By considering her total earnings from the start of the tax year and using the annual limits

C.  By applying the annual National Insurance limits to each fee she receives

D.  By deferring the National Insurance calculation until the end of the tax year

2.    Stuart owed a balancing tax payment of £10,000 on 31st January 2020. In March 2020, he still had not paid it.  What penalty will HMRC will charge Stuart?

A.  £250

B.  £500

C.  £750

D.  £1,000

3.  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?

A. If the income tax relief was not withdrawn, he will pay CGT at 10%

B.  He received income tax relief so will pay CGT at 20%

C.  He has held the shares for over 3 years so will not suffer CGT

D.  He will be exempt from CGT on 50% of gains and will pay 20% on the balance

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

4.   What strategies might be considered for Henry who is contemplating making lifetime gifts as part of his Inheritance Tax planning?

A.  Make a gift into a discretionary trust of an amount over the nil rate band

B.  Make outright gifts and hope to survive them by 7 years

C.  Make a gift into a bare trust as this is a potentially exempt transfer

D.  Make a gift of his business to his wife to ensure he uses his nil rate band

Answers:
1.    B  (CII R03 study text cross reference Chapter 2, Section A7, Brand Financial Training study text cross reference Module 2, Section 2.1.2.4)
2.   B  (CII R03 study text cross reference Chapter 6, Section A4, Brand Financial Training study text cross reference Module 11, Section 11.1.1)
3.   C  (CII R03 study text cross reference Chapter 12, Section B4A, Brand Financial Training study text cross reference Module 7, Section 7.4.1)
4.   BC  (CII R03 study text cross reference Chapter 11, Section E2, Brand Financial Training study text cross reference Module 4, Section 4.1.10)

How did you get on?  You can find out more about our R03 learning resources including our study text, mock papers, calculation workbook and study notes by visiting us at https://brandft.co.uk/cii-r03-ro3-personal-taxation/