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The Technical Quiz: 17 July

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

CPD

Question one

Companies realising capital gains benefit from “indexation allowance”. Why is this likely to be particularly advantageous for property transactions?

A) The relatively long period for which properties are held                  

B) The high level of expenditure typically incurred in purchasing and improving properties                                                 

C) The high rate of price increases in property                                               

D) The high cost of property repairs and maintenance                             

Question two

Monica and Charles, a married couple, want to equalise their estates for income and capital gains tax purposes. What will be the effect for inheritance tax purposes when Charles transfers assets to Monica?

A) There will be no inheritance tax liability as transfers of assets between spouses are exempt transfers             

B) Charles will be making potentially exempt transfers, which will be exempt provided he survives seven years                                                                                                        

C) Charles will make chargeable lifetime transfers and be liable to inheritance tax at the date of transfer             

D) There will be no inheritance tax liability as you would recommend that any transfers are kept to under the nil-rate band

Question three

Ben has taxable remuneration of £48,000 and a pensionable salary of £45,000. His compulsory DB scheme personal contributions are 7 per cent of pensionable pay. In theory, what is the most he can contribute to AVCs with full tax relief?

A) £3,060

B) £4,050

C) £44,850

D) £48,000

Scroll down for the answers

Questions supplied by CPD Centre. Answers at www.moneymarketing.co.uk/technical

Answers:

1) B

2) A

3) C

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