Monthly Archives:March 2019

CII R01 exam

R03 exam – free practice questions

Are you revising for the CII’s R03 exam? Know someone who is? Want to test your tax knowledge? Then read on…..!

We’ve put together 10 single-response multiple choice questions for you as a taster of what you can expect in the R03 exam. This exam is the joint hardest of the CII’s multiple-choice R0 exams with a pass rate of just 54%, every little helps.

We’ve helped over 6,000 people prepare for the CII R0 exams over the past 12 months. We don’t sell multiple choice questions but we are here to help as much as we can with your R03 exam.

What we do offer is unique R03 MP3 audio material. This provides around 4 1/2 hours of dedicated R03 material that enables you to fit your study around your business and social life – not the other way around.  Click here for further details.

Now, onto these practice questions. See how well you do on these R03 exam style questions. You’ll find the answers at the end.

R03 questions

All figures are based on the 2023/24 tax year. They are based on the position in England and there is only one correct answer.

Here goes……..

1. Ben holds 3,000 shares in a UK listed company which declares a dividend of 70 pence per share. If he is a higher rate taxpayer and has already used his dividend allowance, how much tax will he pay on these dividends?

A £183.75

B £708.75

C £682.50

D £840.00

2. Jill, aged 52, has an income which is made up of a £25,000 salary, building society interest of £8,000 and dividends of £12,280. Her income tax liability is:

A £4,873

B £4,732

C £5,073

D £6,542

3. Javid has used all his Inheritance Tax (IHT) annual exemption for the current and previous tax year and decides to make the following additional gifts in this tax year:

(i) £10,000 to his granddaughter on her marriage

(ii) £4,000 to his grandson on his 18th birthday out of normal expenditure

(iii) £3,000 split equally between four friends

(iv) £75,000 to a UK charity

How much of Javid’s gifts would be liable to IHT if he were to die within 7 years?

A £2,000

B £8,500

C £9,500

D £13,000

4. To avoid a Capital Gains Tax liability on an asset purchased before leaving the UK without any held-over gains, an individual must be resident outside the UK for:

A 1 complete tax year

B 2 complete tax years

C 5 complete tax years

D 7 complete tax years

5. The Ramsay Principle has been used by the courts to:

A allow HMRC to obtain details of interest paid to UK residents by overseas banks

B penalise income shifting between spouses in small family companies

C allow HMRC to reduce penalties where a taxpayer, not under investigation, has made a voluntary disclosure

D consider a series of transactions with no commercial purpose except tax avoidance and ignore them for tax purposes

6. Marisa died on 30 July 2023 leaving an estate of £900,000 which did not include any residential property. She left £60,000 to a UK charity and the remainder to be split equally between her husband and her daughter. If she has not made any lifetime gifts, how much inheritance tax must her executors pay?

A £32,040

B £34,200

C £35,600

D £38,000

7. Frankie won a premium bond prize of £10,000 and has received dividends of £50,000 from both an Enterprise Investment Scheme (EIS) and a Venture Capital Trust (VCT). What is his tax position?

A Only the EIS dividend is taxable

B The dividends from both the EIS and VCT investments are taxable

C Only the VCT dividend is taxable

D Both the VCT dividend and the premium bond prize are taxable

8. Alicia has fully surrendered an onshore single premium investment bond with a gain of £20,000. If she has no other savings income and her taxable income is £32,000, she should be aware that:

A. the full gain would be subject to 20% income tax.

B. the full gain would be subject to an additional 25% income tax.

C. she would have a personal savings allowance of £1,000.

D. she would have a personal savings allowance of £500.

9. What is the MOST likely reason for a business to voluntarily register to pay VAT?

A They would be able to claim output tax on their purchases

B They would be able to claim input tax on their purchases

C They would be able to offset the VAT paid against their corporation tax bill

D They would then be able to reduce the price paid by customers for their products

10. Scott is about to buy his first residential property in Oxford for £945,000 which includes £30,000 for fittings. Assuming this is his only property, how much stamp duty land tax would be payable?

A £27,000

B £30,250

C £33,250

D £35,750

R03 Resources

Here are some other tips and information you might find useful:

CII R03 exam: the 5 myths. Click here

Five top tips for R0 exam success – part 1. Click here

Five top tips for R0 exam success – part 2. Click here

Answers: 1: B; 2: A; 3: C; 4: C; 5: D; 6: B; 7: A; 8: D; 9: B; 10: C.

Remember, good preparation is the key. If you want to know how to learn on the go, then click here. Hope that you found this useful. Until the next time

Ian Patterson

Author of the current CF8, J07, and AF6 CII study texts and ex-examiner