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Testing time

1. The Green Budget presented on November 25, 1997 contained proposals for reform of which of the following taxes?

a: Income tax

b: Capital gains tax

c: Inheritance tax

d: Corporation tax

2. The Government proposes to introduce a new Individual Savings Account to replace Tessas and Peps. Which of the following statements is/are true?

a: It will be possible to transfer existing Peps into the ISA subject to the overal maximum of £50,000 in value

b: Up to £5,000 a year per person can be invested in an ISA whether the contribution is in cash or in other form

c: A maximum of £1,000 can be invested in cash into an ISA each year subject to a total limit of £50,000

d: It will not be possible to include life insurance within an ISA

3. Under the proposals for the ISA, when will existing Peps lose their tax-free status?

a: April 1, 1996

b: April 6, 1996

c: October 6, 1996

d: December 31, 1996

4. Which of the following statements is/are true in connection with existing Tessa accounts and the proposed ISA rules?

a: To preserve tax-free status, existing Tessas will have to be closed and transferred into an ISA by April 6, 1996

b: Existing Tessas will have to be closed and transferred into an ISA by October 6, 1999 in order to preserve tax-free status

c: Tessas in existence before the introduction of ISAs will be able to run their full original term within the current rules

d: Following the transfer of a Tessa into an ISA, there will be no limit on how long the investment must be kept to be tax-free

5. Which of the following investments will be acceptable under the proposed ISA rules?

a: Cash

b: Stock and shares

c: Life insurance policies

d: National Savings

e: Shares quoted on the AIM

Answers: 1 – d; 2 – a, c; 3 – c; 4 – c, d; 5 – a, b, c, d.

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