How to pass the CII R03: Tips for calculation questions
The CII R03 exam is far more than a test of your knowledge of the subject. You need to have a really good base knowledge that you will then apply in different ways.
With 50 exam questions to complete in 60 minutes, many of which are calculation based, this can be a really challenging paper.
Following on from our previous article, How to pass the R03: Why do candidates fail this exam? this article looks at tips to tackle calculation questions.
One of the main reasons that calculation questions cause so much stress for some candidates is that they dive straight into the detail and then get lost in all the figures. To avoid this, you need to take a deep breath before you start your answer, and then work your way through the calculation one step at a time. If you have a process to follow you are less likely to feel stress in the exam, and are also less likely to miss something out.
Calculation questions: The points are in the PROCESS
If we look at the steps for an Income Tax Calculation, these are:
- Gather together all of the incomes that are taxable, ignore the ones that are not, and group the taxable incomes in to Non-savings, Savings, Dividends and Chargeable gains
- Make sure you are dealing with Gross figures. If any income has already paid tax, turn it back into the gross equivalent before you start the tax calculation
- Deduct any reliefs that are available from the taxable income, such as pension contributions made gross via the Net Pay arrangements or to S226 schemes (Retirement Annuity Contracts) or interest on qualifying loans.
- Check to see if the Personal Allowance can be left at £12,500, or should it be reduced due to the individual’s Adjusted Net Income
- Check to see if any of the tax bands need to be expanded due to payment of Personal pensions or Charity donations using Gift Aid
- Carry out the tax calculation (remembering to check if any 0% savings starter rate is available)
- Apply any tax reducers such as the Married Couple’s Allowance, the Married Tax Allowance or investments into EIS, SEIS or VCTs.
- Deduct any tax already paid (the amounts that you grossed up in step 2)
Each of the tax calculations has a logical process that you can follow to arrive at the right answer. For income tax it’s an eight-step process, for CGT it’s a six-step version. We cover this in our study materials and workshops. The above graphic is taken from the BTS R03 e-Learning module, showing the first of the eight steps in the Income Tax calculation process.
How many calculation questions will you typically get in an R03 exam?
You could get around 50% of the questions in your exam where you need to grab the calculator. It depends on what questions the system selects for you on the day.
Often they will be a tax calculation, either in full or in part.
Having a well-understood and a well-practiced process that you can call on in the exam for each of the potential tax calculation questions will help you to pass the R03.
One of the most common reasons why candidates worry about calculation questions is that they see a calculation question and “don’t know where to start”.
The CII examiners have a good idea of the mistakes that candidates are likely to make along the way with calculation questions. Watch out for incorrect distractors in the answer options, it’s very easy to miss out one part of the calculation process but still arrive at an answer that is listed in the possible answers!
For anyone new to taxation, R03 can be a real challenge. This is particularly true for R03 because a lot of the knowledge that you need in order to fully understand the subjects that come up early in the study text aren’t fully explained until later chapters. Often it’s not until a second read of the study materials that the content really starts to make sense!
This is one of the challenges that BTS address in our learning materials. Rather than ignore content that is ‘covered later’ or inundate you with info you don’t need to know at that particular time, we tell you just enough about a subject so that you can understand the content you are studying at that time. That gives you a solid foundation of knowledge that we build on throughout or materials: STEP by STEP
Learning and practising all the steps for each of the calculation types, and importantly knowing which steps should be considered BEFORE you pick up the calculator, are skills that will serve you well to pass the CII R03.
The BTS R03 e-Learning module uses graphics, tables and mnemonics to help you to remember the steps in a given calculation process.
Practise full mock exams
Completing a full specimen exam paper will give you a good idea of what the exam experience will be like. Challenge yourself to sit the paper under timed, exam-conditions to replicate the real thing as closely as possible. How is your time management? What is your strategy for dealing with questions you don’t know the answer to? Having a plan ahead of the real sitting will help to reduce exam nerves.
BTS include a full specimen exam paper in the back of the R03 study guide and another completely different specimen exam at the end of the R03 e-Learning module. The specimen exams in the digital study guide and the e-Learning module have the added benefit of being able to replicate the CII online exam experience. Functions including flagging questions for later and a grid to navigate through the questions give a similar experience to the system used by candidates sitting online R0 exams.
Don't just take our word for it...
"After failing the R03 with only 50% on the first attempt using only the CII text book I was feeling really disheartened. I took some advice from some of my peers who were also on the St James’s Place Academy to try switching to BTS for my study material.
I purchased the R03 e-Learning module which I found really simplified the CII learning outcomes and within 2 weeks from my first attempt I achieved a 94% pass!!
I have since gone on to purchase the R02 study guide which I am also finding very easy to understand and I am hoping for another great result in the very near future!"
Leigh Bolland | Associate Partner | May 2021
"Delighted to pass R03 this morning, three down and three more to go! Thank you BTS! The workshops were invaluable and the study material from Bespoke Training Solutions Ltd was high quality."
Craig Rees | Financial Adviser | April 2021