Material Updates

Activity 9.2: The correct answer to activity 9.2 should have been (in order) Principle 6, Principle 1, Principle 5, Principle 7.

See attached for correct answer.

Chapter 5A 3.3: Enforcement

We had previously stated that the maximum term for insider dealing was 7 years whereas it is actually 10 years.

The summary table of the maximum prison terms in relation to different offences covered has therefore been corrected as per the attached.

L06 consolidation test part 1

Question 2: David and Eric have made gains of £22,000 and £31,000 respectively in their open-ended investment company (OEIC) holdings.  Neither has made any other gains or losses.  If David is a basic rate tax payer and Eric a higher rate tax payer, what is their combined Capital Gains Tax liability on these gains?

The correct answer should have been option C – £11,280

Question 74: Stefan is purchasing a residential property to add to his property portfolio. The purchase price is £150,000 and he will achieve rental income of £560 per month. He should be aware that…

The SDLT calculation in the rationale was incorrect. This did not affect the correct answer to the question, but to clarify the correct SDLT for Stefan would be:

First SDLT £125,000 at 5%: £125,000 × 5% = £6,250
Remaining SDLT £25,000 at 7%: £25,000 × 7% = £1,750
Total SDLT payable: £6,250 + £1,750 = £8,000

Q190 has been rephrased as follows: Kathy, a higher rate taxpayer is completing her tax return online. All her earned income is taxed by PAYE and she has also received some income distributions from her range of OEICs. Her UK equity fund paid her distributions of £5,750 and her high-yield corporate bond fund distributions totalled £1,050. How much income tax is payable to HMRC on these distributions assuming these are all of Kathy’s savings and investments?

Question 1

The new FSCS limit is £120,000 rather than £85,000.

We have therefore amended answer B to £245,000 which is the correct answer (answer C was previously highlighted as correct.

The revised rationale is:

The FSCS covers 100% of a deposit where the provider has become insolvent per person per marketing group, capped at £120,000.

Therefore, Paul and Alex’s joint account of £150,000 is entirely covered since they each would be protected for up to £120,000 on the accounts with Bank X. The £45,000 not used up by the joint account can be used by Paul for his sole account. In addition, Alex would have up to £120,000 protection with Bank Z so his sole account of £50,000 is covered in its entirety. So £75,000 +£75,000 + £45,000 + £50,000 = £245,000.

Question 176: Roger and Chastity were married and both were UK residents. Roger was of UK domicile but Chastity is of Belgium domicile. When Roger died earlier this year, his £1,050,000 estate, including the mortgage-free family home, was inherited by Chastity. How much inheritance tax, if any, was due?

This question has been re-written to reflect the new residency rules. The re-worded question now reads: Roger and Chastity were married. Roger was a UK long term resident but Chastity was from Belgium and was not a UK long term resident. When Roger died earlier this year, his £1,050,000 estate, including the mortgage-free family home, was inherited by Chastity. How much inheritance tax, if any, was due?

Question 35: Brian and Rhianna are married and have one daughter, Heather. Brian is a UK long term resident and Rhianna a Brazilian resident and not UK long term resident. Brian has died, leaving an estate of £850,000, including the mortgage-free family home valued at £600,000. What inheritance tax (IHT) liability will there be on his death if everything passes to Rhianna?

The correct answer is C – £80,000

Clarification: the £175,000 Residence Nil‑Rate Band (RNRB)is only applicable to Brian’s direct descendants (children / grandchildren) therefore Rhianna would not be able to use this even though the entire estate has been passed to her. We had previously calculated the answer with Rhianna being eligible to use this benefit which was incorrect.

The question has been amended to state that Brian and Rhianna had a daughter to avoid any further confusion.

The correct answer therefore is £850,000 – £325,000 NRB – £325,000 (for non-UK LTR spouse) = £200,000 x 40% = £80,000 (answer C).

Question 124: Chris and Jessica invested £20,000 into a joint onshore life assurance bond just over 8 years ago. They are considering surrendering the bond for £28,000 having taken no withdrawals. If Chris is a higher rate taxpayer and Jessica a basic rate taxpayer, how will any gain be assessed for income tax purposes?

The question previously stated that Chris and Jessica both invested £20,000 which would have meant that there was no gain to be assessed (£20,000 + £20,000 – £28,000 = -£12,000). Chris and Jessica actually invested £20,000 between them so there is a gain of £28,000 – £20,000 = £8,000.

Chapter 2.2.3: Class 1 Contributions – employers

The table showing the rates of secondary Class 1 NICs as shown in the R03 tax tables were incorrect. The correct rates are attached.

Answer C was marked as correct in error.

The correct answer should have been D. repayment of any excessive pension contributions made.

Question 41

Question text: Jeff, Simon and Marty have the following DC pension schemes respectively:

£44,000 section 32 buyout bond with guaranteed minimum pension
Which of the following statements are TRUE in relation to transferring these benefits?

£32,000 retirement annuity contract with a guaranteed annuity rate

£38,000 personal pension plan with protected tax free cash

Answers B and C were both marked as correct however the correct answers are C and D:

C: Jeff and Marty require independent advice prior to transfer.

D: All three members have protected / guaranteed benefits within their schemes.

Question 10

Question text: Naz has a personal pension of £800,000, a section 32 guaranteed minimum policy of £220,000 and an retirement annuity contract of £100,000. How much pension commencement lump sum (PCLS) could Naz take in the current tax year?

Answer D was incorrectly written as £22,5000. It should have been £225,000.

Q39 – Carol partially retired in July 2025, crystallising some of her defined contribution pension benefits into flexi-access drawdown from which she has been making withdrawals. Carol has been contributing £2,500 monthly to a personal pension plan for the last fifteen years. She now wishes to make an additional £15,000 single gross premium into this plan. What rules apply to her use of carry forward of the annual allowance (AA) and money purchase annual allowance (MPAA)?

The question has been modified to clarify exactly what is required.

Answer A is now correct: Carry forward in relation to both the AA and MPAA cannot be used by Carol.

Page 322

The sentence ‘The CETV is the value of the individual’s DC fund, less any disinvestment charges applied by the scheme’ was incorrect. It should have read ‘The CETV is the value of the individual’s DC fund, less any disinvestment charges applied by the scheme’.