Home Forums Query re Cii answers

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  • Tessa Roberts
    Participant
    Post count: 2046

    Hi Tamnna

    Chargeable gain is £169,950 + 3 lots of 5% (June 15, June 16, June 17) £18,750 = £188,700

    1 May 17 to 1 April 18 is 11 months not 12 (it would be 12 if it was 30 April 18).

    I think your top slicing figure is out slightly because your chargeable gain is out slightly…the calc is shown early on in the model answer.

    You’ll need to do the new top slicing method going forward.

    Hope that helps 🙂

    Tessa.

    Tutor for Expert Pensions.

    Tamnnaj
    Participant
    Post count: 64

    Thanks Tessa.

    I assumed 5% pa to date i.e. I worked out the 5% across 3 years and 10 months from July 2017 to April 2018 inclusive.

    I am counting on my fingers! But isn’t 1 May 2017 to 1 April 2018, all within the 2017/18 tax year. And it makes 12 months including May 17 and April 18…

    Yes indeed, all understood re gain and top slice :/

    Great thanks for confirming. How would that sort of answer look like out of interest?

    Many thanks
    Tamnna

    Tessa Roberts
    Participant
    Post count: 2046

    I can see where you’re coming from as regards the withdrawals – but the case study states it’s an annual withdrawal so there were only 3 to take account of on this occasion (although 4 would have been permissable, we can’t take a 4th into account because it didn’t happen.)

    Also – and I didn’t notice this yesterday – but the question states
    salaries weren’t paid on 1 April 2018, so that would account for the 11 months.

    If you look at the video on top slicing / the pru / hmrc examples (links below), that will show you how a bond answer might now look.
    https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/top-slicing-relief-facts/

    https://www.gov.uk/hmrc-internal-manuals/insurance-policyholder-taxation-manual/iptm3850

    Tessa.

    Tutor for Expert Pensions.

    Tamnnaj
    Participant
    Post count: 64

    Thanks Tessa – I can see that the info in the case study was clear in stating annual withdrawals, not 5%pa payable monthly.

    I can also see that the 1 April 2018 salary wasn’t paid. Note to self!

    Question re April 2017 2 (a) if I may please? :

    – why is fixed interest UT showing as £1,125 in the answer, but is £900 in the case study? Looks like gross of 20% tax, but deposit interest is £551 on the case study info and the answer…getting a bit confused!

    – I was going to also ask about calculating the tax deducted, but I realise now that it’s £1,125-£900=£225

    Finally, in general, is it worth doing past papers prior to April 2017,given that the calcs were computed slightly differently than now…?

    Many thanks once again
    Tamnna

    Tessa Roberts
    Participant
    Post count: 2046

    April 17 would’ve been based on tax year 16/17 – if memory serves cash deposits became gross 16/17 but fixed interest unit trusts were still paid net in that year – the change for them came in 17/18.

    If you go too far back, the calcs do get messy – you could still review the case studies and maybe identify the tax treatment of each item for practice, but maybe not do the calcs themselves…

    Kind regards,

    Tessa.

    Tutor for Expert Pensions.

    Tamnnaj
    Participant
    Post count: 64

    Ah thanks Tessa, think that explains it!

    Just on the top slice calcs if I may…

    I am reviewing the Pru material atm and specifically the onshore bond calcs.

    What happens where the tax on the bond gain after 20% BRT credit (a) less the tax on the top slice gain after 20% BRT credit (b) is a negative amount (c)?

    My understanding is that the difference of (c) lets say is taken off the total tax liability as is the 20% BRT tax credit, to arrive at a reduced liability. and/or (c) indicates the tax on the bond gain. Where it’s a negative figure, does that mean there is no additional tax due on the bond gain? But then if the figure was a positive amount, there would be a reduction in the tax…something doesn’t quote add up (scratching my head and scrunching up my face as I type in utter confusion!)

    Please help/advise.

    Thanks
    Tamnna

    Tessa Roberts
    Participant
    Post count: 2046

    If the tax credit already covers the tax due then I’d say there’s no tax due.

    There are no examples of this scenario out there and nothing in the CII /HMRC to confirm either way – but that would be the logical conclusion.

    Tessa.

    Tutor for Expert Pensions.

    Tamnnaj
    Participant
    Post count: 64

    Thanks Tessa.

    I ran through the Pru guide and applied it through a real ife case, and I think the penny is dropping, ever so slowly!

    Tamnnaj
    Participant
    Post count: 64

    Hi Tessa

    Sorry me again!!

    Question 3b of CII exam paper October 2018 –

    I was answering (bi) as domicile of choice and deemed domicile

    And noticed (bii) explicitly stated deemed domicile!

    The actual answer for (bi) makes reference to residency I think when it states “significant ties” and deemed domicile and domicile of choice I think!

    How am I best to answer this sort of question because it feels like a real mixture of residency, deemed domicile, domicile of choice and I’ve spent more than 10 mins on answering both questions :/

    Thanks!
    Tamnna

    Tamnnaj
    Participant
    Post count: 64

    Also the answers relate heavily on IHT…is that key when deemed domicile or domicile of choice?

    Thanks
    Tamnna

    Tamnnaj
    Participant
    Post count: 64

    Hi Tesssa

    I’m just reviewing question 3 a of exam paper April 2018.

    Just wondering how the answer of 3aii includes spouse when the case study states she’s divorced? Surely that’s a generic answer and not a specific one and I thought answers should relate back to the case study in question…?

    Tamnna

    Tessa Roberts
    Participant
    Post count: 2046

    Hi Tamnna,

    I think the first thing is to make sure – when you have a two-parter – you don’t start answering stuff relating to the second part in the first part – so maybe a little bit of planning there.

    The reference to ‘ties’ isn’t to do with the ‘sufficient ties’ rest (the residency test) – it’s more to do with breaking off connections with the ‘old’ country.

    bi) is more of a process question.

    bii) is an impact on tax question.

    Hence the model answers are quite different – again, maybe it’s a bit of thinking about the question before you start writing – CII won’t test the same thing twice in an exam so, maybe, if you’re writing down the same thing it’s a sign you need to revisit the question.

    Hope that helps (and doesn’t sound too critical!)

    Tessa.

    Tutor for Expert Pensions.

    Tessa Roberts
    Participant
    Post count: 2046

    It should be case study specific – (unless the question itself is generic) – I don’t have that paper – can you confirm exactly what the question is?

    Tessa.

    Tutor for Expert Pensions.

    Tamnnaj
    Participant
    Post count: 64

    Hi Tessa

    Thanks for that, and no didn’t sound critical at all 🙂

    Question 3aii of April 2018 is:
    List four of the factors that would be considered then determining residency using the sufficient ties rest

    Looking at it now, it does seem more generic…but it came after the case study specific question 3ai (if Nelle works overseas, explain the circumstances in which she would be treated as automatically non resident in the UK) so I reckon I’ve gotten muddled up there…always see that bit more on a second read!

    Just another question if I may please?:

    April 2019 question 3di periodic charge. The answer includes the effective rate, which I thought was applicable to the exit charge – page 170 of the study notes.

    Could you clarify for me please?

    Thanks
    Tamnna

    Tamnnaj
    Participant
    Post count: 64

    Hi Tessa

    Sorry me again!

    Question 1ciii of April 2018 asks about the May 2010 discretionary truat which invested in an onshore bond.

    The answer talks about CGT on a collective portfolio, would that be because of the underlying assets of the onshore bond do you think?

    The case study does go on to say that the bind was encashed and reinvested into a collective portfolio in Jan 2018. Wondering if it’s because of that the answer talks about CGT on collectives…

    Just scratching my head a bit because the question clearly stated with regard to the 2010 discretionary trust…

    Be helpful if you could clarify for me please once again!

    Thanks
    Tamnna

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