View more on these topics

Technical Quiz- Sept 20

To help you to keep up with the fundamentals of tax, retirement and financial planning, try answering these questions. Answers below.

Question 1: Patrick has purchased his first flat but is worried about capital gains tax. He asks you how long he must own and live in his property before the main residence exemption from CGT applies. You reply-

A) 5 years

B) 3 years

C) 1 year

D) There is no minimum period

Question : Which of the following are still entitled to indexation relief to reduce their taxable capital gains?

A) Bare trusts

B) Charities

C) Partnerships

D) Companies

Question 3: Which statement is correct regarding the annual capital gains tax exemption?

A) It can be carried forward one year if unused.

B) A child under 18 is entitled half the adult exemption.

C) A trust is entitled to at least one tenth of the exemption

D) Unused exemption can be transferred from one spouse to another.

Question 4: Anthony has earned income of £65,000 in the current tax year. He has also made a capital gain of £22,000. At what rate will he pay capital gains tax?

A) 18%

B) 20%

C) 28%

D) 40%

QUESTION 5: Alice owns 10,000 units in a unit trust. She is a higher rate taxpayer and her husband Tom is a non-taxpayer. She is already using her CGT annual exemption. She is considering transferring the units to Tom so that he can make the encashment. Which of the following statements is true?

A) There will be no CGT on the transfer of the units to Tom and on later disposal his gain will be calculated based on Alice’s original cost

B) When Alice transfers the units to Tom her original base cost will, in effect, be lost

C) The transfer of the units to Tom will crystallise a CGT charge on Alice

D) Pamela transferring the units to Tom, Tom then making an encashment using his annual CGT exemption and then passing the proceeds back to Alice the day after encashment is an acceptable tax planning device

Questions supplied by Technical Connection

Answers

1 D

2 D

3 C

4 C

5 A

Recommended

Jupiter’s Bezalel adds risk into strategic bond

Jupiter strategic bond manager Ariel Bezalel has cut Australian government bond exposure in the £1.2bn Jupiter Strategic Bond fund and raised bank debt exposure as he adds risk into the fund. Bezalel says the move follows the European Central Bank’s announcement in July that it will help stimulate the eurozone through an unlimited bond-buying programme. […]

Pension funds could be hit by RPI reform

There are fears that pension funds could be hit by changes to inflation calculations as the Office for National Statistics launches a consultation on whether to reform the retail prices index. The ONS is considering calculating RPI using the same methods as the consumer prices index, which is usually lower. The consultation starts on 8 […]

New advice strategies: Peter Chadborn on reshaping his firm

In a new series looking at how firms are remodelling their businesses in preparation for the RDR and far beyond, Cherry Reynard speaks to Peter Chadborn about the big structural calls Plan Money has been making.

Axa IM launches Emerging Markets Short Duration fund

Axa Investment Managers has launched the Axa WF Emerging Markets Short Duration fund. The Luxembourg-domiciled Sicav is currently only available for investment in Luxembourg, however the group is awaiting FSA approval for registration in the UK. The fund is run by head of the emerging market debt team Damien Buchet and will join the Sterling […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. is question 3 correct? and why isnt it in the paper?

  2. CGT during the life of the trust
    The trustees are only entitled to half the individual annual CGT exempt amount. However, this exemption is shared equally between all trusts created by the same settlor, subject to a minimum of one fifth of the trust exemption.

  3. It is correct. Trustees have half the annual exemption (£5,300) split between the no of trusts in existence, but subject to a minimum of £1,060 per trust, which is one tenth of the (full) annual exemption (£10,600)

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com