Every month Professional Paraplanner teams up with Brand Financial Training to provide a series of questions from across the CII syllabus to test your knowledge .
Whether you are preparing for your exams, or simply want to keep your knowledge up-to-date, Professional Paraplanner’s Development Zone can help.
These questions relate to examinable Tax year 25/26, examinable by the CII until 31 August 2026.
You will find the answers separately under the Development Zone tab on the Professional Paraplanner website.
We hope you find our Q&A useful in achieving your qualifications.
QUESTIONS
1. Which of the following IFA firms would NOT require its annual accounts to be audited?
A. An unincorporated firm that doesn’t have permission to hold client assets.
B. A sole trader who has formal permission to hold client assets.
C. A limited liability company who undertakes activity within the scope of the Insurance Distribution Directive.
D. A partnership who operates a client bank account specifically to hold client monies with formal permission to do so.
2. Your client, Anya, has been identified as having an adventurous risk profile and as such requires 75% of her portfolio in equities. You have decided to place half of this in large cap and half in small caps. This is this an example of
A. strategic asset allocation.
B. portfolio rebalancing.
C. using a momentum-based investment strategy.
D. tactical asset allocation.
3. What happens to ‘excluded property’ trusts if the settlor subsequently becomes a long-term resident in the UK?
A. The trust assets remain protected from Inheritance Tax (IHT).
B. The trust becomes part of the settlor’s worldwide estate and is liable to IHT.
C. The trust is subject to IHT, but relief given for the period the settlor was a long-term resident in the UK.
D. If at least one of the trustees is UK resident, then the settlor’s residence status has no effect.
4. A self-employed individual can obtain higher rate tax relief on personal pension contributions by
A. reducing their first payment on account by the amount of tax relief.
B. reducing their second payment on account by the amount of tax relief.
C. reducing their balancing payment by the amount of the tax relief.
D. paying the pension contributions net of higher rate tax.
5. Christopher, a doctor, has taken out an income protection policy to insure against the costs of employing a locum if he is ill, therefore the premiums qualified as a deductible business expense. The benefits he receives on a claim will be paid
A. gross and free of any liability for income tax.
B. gross but taxable as a business receipt.
C. net of basic rate income tax.
D. net of corporation tax.
6. Ella and Tim are in their late 70s. Their investment portfolio is mostly held in cash and fixed-interest investments. They should be informed that their portfolio is most likely to suffer from
A. political risk.
B. gearing risk.
C. liquidity risk.
D. inflation risk.
7. A Eurobond can be best described as a conventional bond with a
A. fixed nominal value and fixed coupon.
B. variable nominal value and variable coupon.
C. variable nominal value and index linked coupon.
D. fixed nominal value and index linked coupon.
8. Betty has selected a more expensive care home than the local authority would normally provide based on her assessed needs. The local authority will usually
A. allow someone else to pay the difference between the care home fees and the local authority contribution.
B. regard payments from Betty’s individually owned long term care insurance plan as a top-up.
C. not allow third party contributions from a relative.
D. allow Betty to use the personal expenses allowance to buy more expensive care.
9. Colin has a property valued at £250,000. He wants to release some funds to pay for a cruise now, but later he may wish to sell his current house and trade down. What sort of equity release scheme should he avoid?
A. A lifetime mortgage with interest roll-up.
B. A full home reversion plan.
C. A lifetime mortgage with interest repayment.
D. A drawdown lifetime mortgage.
10. Max owns a small chain of florists in the southwest of England. As part of his expansion plans, he is buying a new shop in a rather up-and-coming area for a purchase price of £240,000. What rate(s) of Stamp Duty Land Tax will he pay?
A. 1% on £240,000.
B. 2% on £240,000.
C. 0% on £150,000 then 1% on £90,000.
D. 0% on £150,000 then 2% on £90,000.
