Cii Practice Test 1

Question 1

List the main State benefits that are dependent on her National Insurance contributions.

Answer 1

Basic State Pension
New State Pension
Jobseeker’s Allowance, the contribution-based element
Employment and Support Allowance, the contribution-based element
Maternity Allowance
Bereavement benefits

Question 2

Describe the protection you would put in place for gift over the NRB to avoid all IHT on the gift.

Answer 2

Gift inter vivos policy
Seven year reducing term
Sole Life/pick life assured
Sum assured amount over NRB x 40% 
Beneficiaries recipient of gift as they are personally liable for the IHT
Seven-year level term assurance to cover loss of NRB
Sum assured £130,000 (£325,000 x 40%)
Beneficiaries executors
Both policies in trust

Question 3

State the criteria for a company to be a qualifying EIS (not knowledge intensive).

Answer 3

Gross assets of no more than £15m prior to investment and no more than £16m after
Permanently based in the UK
Carrying out a genuine qualifying trade.
Unlisted on major exchange when Enterprise Investment Scheme (EIS) shares are issued
Raising no more than £5m under EIS
Fewer than 250 full time employees

Question 4

What order would creditors be paid on bankruptcy?

“SEPFUIS”

Answer 4

Secured Creditors
Expenses of bankruptcy
Preferential Creditors
Floating Charge Holders
Unsecured Creditors
Interest due on debts since the bankruptcy order
Debts to his spouse/civil partner

Question 5

What needs to be done to set up a POA?

Answer 5

The power of attorney must be put in writing/registered
Witnessed by an independent person
Signed by the donor.
Donor needs to be aged 18+ and of full capacity

Question 6

What must someone do, simply, to establish a new domicile of choice?

Answer 6

Show intention to remain in the new country permanently

Question 7

List the actions she could take in order to support her application for a new domicile of choice

Answer 7

Have a purpose for remaining there/employment/retirement.
Sever all links with the UK.
Open a bank account there.
Write a Will there.
Arrange to be buried there.
Purchase a property there.
Register to vote there.
Apply for citizenship.

Question 8

Explain, in detail, the tax treatment of any payments from a discretionary trust

Answer 8

The distribution is regarded as trust income.
This is paid out with a tax credit of 45%.
Beneficiary is deemed to receive the income gross.
If he is a non-tax payer, he can reclaim the full amount.
If he is a basic-rate tax payer, he can reclaim 25%.
If he is a higher-rate tax payer, he can reclaim 5%
As the trust has only paid tax at 38.1%, the trustees are liable for the difference between the trust rate and the tax credit.