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R03 exam

R03 exam: how to pass

The CII’s R03 exam, Personal Taxation, has the lowest pass rate for the R0 exams. Figures show that R03 has a pass rate of 54%. And do you know what, it will probably feel tough.

The CII R03 exam has 50 questions, and you have 1 hour to complete it. 39 questions are single-response questions that only need one answer. 11 of the 50 are pesky multiple-response question that require more than one answer. These are much harder to answer.

10 tips to help you pass R03 first time

Here are 10 tips to make sure you pass the exam first time – or at least make it more likely!

  1. Put in the hard yards. The CII recommend around 60 hours of study and most people will, unfortunately, need this and perhaps more. Why? Because R03 covers all the main aspects of UK taxation – income tax, capital gains tax and inheritance tax. It also includes the taxation of investments. But it also includes national insurance and VAT and these are likely to be unfamiliar territory for most people.
  2. Work smarter, not harder. It’s not just about how much study you do, but it’s also about the quality of your study. Most people learn best by ‘doing stuff’, rather than just reading (which is passive). For example, use highlighter pens, write summary notes and use the CII online RevisionMate practice questions. You might also use our audio books so that you can learn on the go. Click here for details.
  3. Focus on chapters 9, 10 and 11 of the CII R03 study text.  The CII R03 study text follows the sequence of the syllabus. The questions are not allocated equally across each chapter in the study text so if time is short, why wouldn’t you focus on the chapters that are most heavily examined? These three chapters not only account for all of the tricky multiple response questions (which will require a greater level of understanding), but also half the overall questions in the R03 exam. Click here to see the R03 exam syllabus.
  4. Focus on the content you don’t know. Most people will be familiar with some elements of the content. As few people read the study text from cover to cover, focus your reading on the bits you are unfamiliar with. Why? The fact is that some knowledge goes a long way. Even if you don’t know the answer to a question, a little knowledge will help you to eliminate one or more of the incorrect answers. This leads me on to the next tip.
  5. Guess! Questions in R03 are marked positively so if you guess and get it wrong, you don’t lose anything. If you get it right then, bingo, one mark closer to the pass mark. Use a process of elimination to reduce the likely number of options but if in doubt, guess. Never leave a question unanswered.
  6. When studying, don’t get bogged down in lengthy complex calculations. A lack of time in the exam will probably be your biggest challenge with R03. That’s the bad news. You have just over a minute to answer each question. The good news is that the CII can’t expect you to do long complicated calculations because you won’t have enough time. As a result, when revising, don’t seek out the most complex scenarios because they might not be able to test you on them.
  7. Practice, practice, practice. There really is no substitute for answering R03 practice questions. Start using these early on in your preparation. Most people learn from their mistakes – so make lots of them during your prep so you don’t make them in the exam.  Don’t leave practice questions until just before you sit the R03 exam.
  8. Complete the R03 CII exam guide at least twice. As I said earlier, time pressure is the biggest issue for many people. Do your practice runs under exam condition so you get a feel about what it’ll be like in the exam. You also get familiar with the tax tables and the information they provide in the exam for you (which you don’t need to remember). The CII exam guide is the best guide there is as to what your actual exam will look like. Click here to access this.
  9. Read the exam questions twice. Trust me, if the question gives you information, you’ll need to use it somehow. The CII doesn’t give information to just ‘pad out’ a question. So read the question twice and ask yourself: ‘how do they expect me to use this information?’.
  10. Take a calculator into the exam. Around 10-15 questions in a typical exam will need a calculator. Whilst many of these are straightforward, you’d be surprised how many people turn up on our workshops and can’t use a calculator. So practice beforehand and make sure you are familiar with your calculator.

R03 exam resources

Click here for our FREE practice questions

Be prepared. Good preparation leads to success. If you want to know how you can learn on the go and fit it in around everything else, click here for details.

Until the next time.

Ian Patterson

Ex-examiner and author of the CII study texts for CF8, J07 and AF6

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