Free CeMAP 1 Quiz Test Unit 1 Topic 4

1 / 25

which one is NOT subject to zero-rated VAT?

Meals in restaurants

Supplies of medicine

Children’s clothing

Food in supermarkets

2 / 25

In the event of a transfer on death, who will be responsible for paying any inheritance tax liability?

On the deceased’s life assurance company

On the deceased’s estate

On the deceased’s spouse or next of kin

On the donor

3 / 25

How much stamp duty reserve tax is payable on the purchase of bearer instruments with a market value of £100,000?

£1,500

£1,000

£500

£2,000

4 / 25

Which of the following statements regarding capital gains tax (CGT) is accurate?

CGT may apply to chargeable assets held both within and outside the UK upon disposal.

Premium Bond and Lottery winnings are subject to CGT as they are considered unearned income.

The annual exemption allowance can be carried forward for use in a subsequent tax year.

CGT might be payable on a deceased individual's estate, in addition to inheritance tax.

5 / 25

which one might result in a liability for capital gains tax at the time of disposal?

A UK resident selling their holiday home in Spain for a profit

Disposals to recognized charities

The deemed disposal of assets upon an individual's death

Transfers between spouses who are living together

6 / 25

which one would NOT be considered a liability when calculating an individual's estate at the time of death?

Loans

Mortgages

Hire purchase

Jointly held assets

7 / 25

In August, Rob purchased ordinary shares for £100,000. What amount of stamp duty reserve tax did he have to pay?

£500

£1,000

£1,500

£2,000

8 / 25

Lucy purchased an antique Chinese vase in 1985 and recently sold it at an auction, making a profit. Which of the following expenses will she NOT be able to deduct from any potential capital gains tax liability?

Advertising costs

The cost of a repair to a hairline crack

The cost of acquiring the vase in 1985

The auctioneer's commission for the sale

9 / 25

What is the rate of withholding tax imposed on non-resident entertainers and sportsmen and women in the UK?

25%

40%

20%

22%

10 / 25

Suppose the current annual gift allowance for inheritance tax purposes remains at £3,000. What exemption would be allowed in year four if the individual did NOT make use of the exemption in the preceding three years?

£12,000

None

£3,000

£6,000

11 / 25

If an individual is domiciled in the UK at the time of death, which assets would be included in their estate for inheritance tax purposes?

In the EC only

In countries with a double taxation agreement with the UK only

In the UK only

Wherever situated

12 / 25

which one could potentially be liable for capital gains tax?

An insurance bond bought for £20,000 and surrendered by the original investor at a profit

An antique purchased by an individual for £20,000 and later sold at a profit

Government stocks bought for £20,000 and later sold at a profit

A painting bought by a self-employed dealer for £20,000 and later sold at a profit

13 / 25

Regarding VAT purposes, businesses that charge fees for providing advice on pensions contracts are:

zero-rated

exempt

subject to the normal rate of VAT

subject to half the normal rate of VAT

14 / 25

What do 'allowable deductions' refer to in the calculation of capital gains tax liability?

Government fixed allowances against capital gains tax liability

The annual exemption limit only

The annual exemption limit and the indexation allowance

Costs incurred in acquiring, enhancing, and disposing of an asset

15 / 25

How would you best describe a potentially exempt transfer?

A transfer with deferred inheritance liability, provided it is made more than 7 years before death.

A small gift not exceeding £250, made during an individual's lifetime.

Any transfer of any amount between spouses.

A transfer that incurs no immediate charge to inheritance tax, regardless of the amount transferred.

16 / 25

Under which circumstances could a liability for capital gains tax arise?

A corporation sells some of its investments

A public limited company's daily trading

Disposal of assets upon the retirement of a sole trader

A partnership's daily trading

17 / 25

Brad gifted £500,000 to his son Paul in May 2017. Upon Peter's death in June 2020, his estate was valued at £750,000. What is the applicable Inheritance Tax (IHT) rate for at least part of the £500,000 gift?

24%

32%

40%

18 / 25

At what rate would inheritance tax be applied at 40%?

The amount of the chargeable estate above the threshold

The full value of the estate after an individual domiciled in the UK dies intestate

The value of the estate that remains after the proportion due to the deceased's spouse has been deducted

The total value of the deceased's estate

19 / 25

Oliver recently sold some unit trusts and made a taxable gain of £6,700. His taxable income for this tax year is £20,000. What amount of capital gains tax is he obligated to pay?

Nil

£1,840

£670

£1,340

20 / 25

Which one is usually not subject to capital gains tax upon disposal?

A holiday home

Shares in UK companies

An antique table worth £5,000

A unit trust

21 / 25

Vincent passed away in May, leaving an estate valued at £350,000. He had not made any gifts or transfers before his death. In his will, he left half of his estate to his son and the other half to his wife. What was the inheritance tax liability?

£43,200

£30,000

Nil

£140,000

22 / 25

Among the following assets, which one would be free from capital gains tax?

Euros held for use on foreign holidays

A Spanish property used for holiday visits

Shares purchased on the UK stock market

A piece of personal jewelry valued at £20,000

23 / 25

which one is NOT exempt from VAT on its supplies?

Accountants

Doctors

Opticians

Dentists

24 / 25

When is the tax due to be paid after a 'chargeable lifetime transfer'?

Following the death of the donor

Immediately

After 6 years

After 7 years

25 / 25

What happens when a capital loss occurs upon the disposal of an asset?

It can be offset initially against gains made in the year the loss occurred.

It should be carried back to the previous year.

It must be carried forward to the next tax year to offset against future capital gains.

It is not relevant to capital gains tax calculations.

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