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Test Your Knowledge: Questions – January 2021

12 January 2021

Professional Paraplanner’s TDQ (Training, Development and Qualifications) series, is run in conjunction with key support providers, such as Brand Financial Training, and aims to test your knowledge of the financial services market, as part of  your overall training goals and exam techniques.
The following questions relate to examinable Tax year 20/21, examinable by the CII until 31 August 2021.


1. Mr Smith recently died intestate leaving a wife and 2 children both over the age of 18. How would his estate be distributed?
A. His wife takes personal chattels, assets of £270,000 plus half of any balance outright. The children get the other half.
B. His wife receives everything
C. His wife takes personal chattels, assets of £450,000 plus a life interest in half of the residue. The children get the other half of the residue plus the capital on the death of his wife.
D. His wife receives half of the estate with the remainder in trust for the children

2. Which of the following is a measure of UK consumer price inflation that includes owner occupiers’ housing costs?

3. Mark earns a basic salary of £50,000 and also receives self-employed profits of £20,000. In this tax year, what is Mark’s total liability to income tax?
A. £11,500
B. £14,000
C. £15,500
D. £20,500

4. Martin’s registered pension fund is being transferred to a QROPS. The transfer is in excess of his lifetime allowance. What lifetime allowance charge will apply to the excess before the funds are transferred?
A. 55%
B. 45%
C. 40%
D. 25%

5. Which of the following reasons CORRECTLY explains why protection against an inheritance tax liability may be beneficial?
A. Estates over the value of the nil rate band are charged on an increasing scale
B. Unused allowances of spouses are lost
C. Executors are liable for paying any IHT before the estate is distributed
D. Transfers between spouses are only exempt up to the value of the nil rate band
6. A company’s return on equity can be worked out using figures from the company’s income statement. The best definition of Return on Equity is:
A. amount of return paid to preference shareholders.
B. earnings achieved compared to equity invested.
C. amount of return paid to ordinary shareholders.
D. earnings achieved compared to capital employed.

7. Who are the only institutions eligible to submit competitive bids directly to the DMO?
A. Primary-edged market makers
B. Secondary-edged market makers
C. Gilt-edged market makers
D. Debt-edged market makers

8. It is usually desirable for the client’s family to be involved where a financial recommendation involves:
A. Pension planning
B. Protection
C. Equity release
D. Investment planning

9. Wayne has a shared appreciation mortgages and bank base rate has just increased by 1% – what effect will this have on his mortgage?
A. No effect
B. Lender will be entitled to a larger share of property value on death or move to residential care
C. Amount of overall debt on death or move to residential care will increase
D. Payments to lender will increase

10. Support for mortgage interest (SMI), the Government’s loan scheme, is available to certain homeowners to help pay which of the following?
A. The capital outstanding on their mortgage up to £200,000
B. The premiums on an endowment policy linked to their mortgage
C. The contributions into a pensions scheme linked to their mortgage
D. Some or all of the interest on their mortgage loans


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