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The Technical Quiz – 11 October

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

The Technical Quiz MM 480

Question 1: Damian died aged 43, leaving a widow. The value of the death benefits available from his various pension arrangements amounted to £1.8m and he has no transitional protection. Assuming his various schemes provide the full range of options allowed by the legislation, what benefits can be provided for his widow?

A) Only a tax-free lump sum of £1.8m

B) Only a lump sum of £1.8m, of which £1.5m can be paid tax-free with £300,000 subject to a lifetime allowance excess charge of 55%

C) A lump sum of up to £1.5m tax-free with the excess taken either as a lump sum subject to a lifetime allowance excess charge of 55% or used to provide a dependant’s pension taxable under PAYE in the widow’s hands

D) A lump sum of up to £1.5m tax-free with the excess taken either as lump sum subject to a lifetime allowance excess charge of 55% or subject to a lifetime allowance excess charge of 25% if used to provide a dependant’s pension taxable under PAYE in the widow’s hands

Question 2: Where a scheme administrator/trustees have not distributed uncrystallised lump sum death benefits within two years of the date, they could reasonably have been expected to know of the member’s death, any lump-sum payment:

A) will be subject to a 40% IHT charge

B) will be subject to a 55% unauthorised payment charge

C) will be subject to a 55% unauthorised payment charge and a 40% IHT charge

D) will be treated as an unauthorised member payment and be included in the deceased member’s estate for IHT purposes

Question 3: The upper age for a pension to be paid to a child of the deceased, in normal circumstances is

A) 22

B) 22, unless in full time education

C) 24

D) 24, unless in full time education

Question 4: A child can receive a pension beyond the age in question 3 if:

A) they are in full time education

B) in the opinion of the scheme administrator, was at the date of the member’s death dependent on the member because of physical or mental impairment

C) they fitted the HMRC definition of dependency (on the grounds of physical or mental impairment) on the member at the date of the death

D) they are in receipt of disability living allowance

Question 5: The maximum level of dependant’s pension that can be paid to a widow of a deceased member of a SSAS, who died with uncrystallised benefits is:

A) two-thirds of the member’s “final remuneration”

B) two-thirds of the member’s prospective pension

C) Unlimited

D) Unlimited but where the value of the benefit results in the widow’s lifetime allowance being exceeded, the excess is subject to a 25% lifetime allowance excess charge

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Questions supplied by Technical Connection

_________

Answers
1 C
2 D
3 A
4 B
5 C

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