R03 Tax planning in investment advice: free practice questions
5 free questions on Tax planning in investment advice, part of learning outcome 4 (Tax and investment advice). Pick an answer to check it, or open the answer to see why each option is right or wrong.
Question 1 of 5
Up to how much investment income could a married couple with no other income receive in 2026/27 using their personal allowances, savings allowances and dividend allowances?
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The answer is A: £28,140
Each person: £12,570 personal allowance + £1,000 savings allowance + £500 dividend allowance = £14,070. A couple: £28,140 (with the right mix of income).
Why the other options are wrong
B
The starting rate isn't included in this figure.
C
That's the figure for one person; a couple has two sets of allowances.
D
Each person also has a £1,000 savings allowance and £500 dividend allowance.
Question 2 of 5
A client has unit trusts showing a £5,000 gain and no other disposals. How could she use more than one annual exempt amount?
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The answer is A: Sell some before and some after 5 April
Splitting a disposal between two tax years can use two £3,000 exemptions. Repurchases through a spouse, trust or ISA avoid the 30-day rule. Transaction costs should be weighed up, especially if gains would only be taxed at 18%.
Why the other options are wrong
B
That uplifts the base cost but doesn't use her exemptions.
C
That's a disposal by her at market value.
D
Repurchasing within 30 days is matched, so no gain is realised.
Question 3 of 5
Which statement about buying second-hand VCT shares on the market is correct?
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The answer is C: No income tax relief, though dividends and gains are still tax-free
Income tax relief is only for new VCT shares held five years. Second-hand shares get no relief, though dividends and gains are tax-free. The second-hand market is limited.
Why the other options are wrong
A
VCTs never give CGT deferral.
B
There's no holding period for second-hand shares.
D
Relief is only for newly issued shares.
Question 4 of 5
Mary received gifted shares with a held-over gain four years ago. She now plans to emigrate permanently. What should her adviser warn her about?
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The answer is B: Leaving within six years can trigger the held-over gain
If a donee who received a held-over gain becomes non-UK resident within six years, the gain is charged, with an exception for full-time overseas employment if she returns within three years still holding the assets.
Why the other options are wrong
A
It's triggered by ceasing to be resident.
C
The gain crystallises if she leaves within six years.
D
The donor is only liable if she doesn't pay.
Question 5 of 5
Which of these points should be discussed with a client leaving the UK permanently?
1. She can keep her ISAs but can't pay in more while non-resident.
2. Certain gilt interest can be paid free of UK tax to non-residents.
3. Her UK assets will stay within UK IHT.
4. Her worldwide assets leave UK IHT the day she departs.
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The answer is C: 1, 2 and 3 only
Non-residents keep ISAs but can't subscribe (and they may be taxed abroad). Some gilt interest is exempt for non-residents, and gilts bought after 5 April 2013 are usually excluded property. UK assets stay in IHT, and worldwide assets until long-term residence ends.
Why the other options are wrong
A
Worldwide assets stay within IHT until long-term residence ends, three to ten years later.
B
Certain gilt interest is also exempt for non-residents.
D
Statement 1 is correct; statement 4 isn't.
Practise all 37 Tax planning in investment advice questions
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