Free CeMAP 1 Quiz Test Unit 1 Topic 9

Unit 1 Topic 9

1 / 13

Julia is a higher rate taxpayer. She understands that she pays her pension contributions net of tax relief to the product provider and has to reclaim the remainder from HMRC. At what rate is this additional relief reclaimed from HMRC?

40%

18%

22%

20%

2 / 13

Which one of the following is TRUE of the tax relief available for an individual’s contribution to a personal pension plan?

Nil rate taxpayers cannot receive tax relief on contributions

Relief is restricted to 10% for starting rate taxpayers

They will receive tax relief up front at their marginal rate

They will receive basic rate tax relief up front and any higher rate relief via self-assessment

3 / 13

Which one of the following items would usually be used to calculate the maximum permitted contribution payable to a personal pension plan?

Employee’s highest rate of income tax

UK earnings

Class 1 NIC record

Date of birth

4 / 13

Excluding any employer’s contribution, what is the MAXIMUM percentage of UK earnings that an employee can contribute to a personal pension plan?

40%

100%

78%

25%

5 / 13

After taking the tax-free cash sum, a personal pension plan holder would often use the balance of the fund to buy:

A pension income bond

an annuity

Compulsory retirement contract

A FSAVC

6 / 13

A client’s personal pension plan fund at retirement is £150,000. What is the MAXIMUM available as a tax-free cash sum?

£24,000

£37,500

£32,000

£40,000

7 / 13

Which one of the following items would usually be used to calculate the maximum permitted contribution payable to a personal pension plan?

Employee’s highest rate of income tax

Date of birth

Class 1 NIC record

UK earnings

8 / 13

Colin is paying £100 per month to the cash element of an ISA in this tax year. He is considering using the equities element to the ISA. What is the maximum additional amount he can pay into the ISA this tax year?

Nil

£20,000

£18,800

£3,600

9 / 13

How is the income from a pension taxed in retirement?

It is tax free

As investment income

As earned income

As unearned income

10 / 13

The open market option enables the plan holder to:

move his pension fund between providers in order to get the best investment return before retirement.

have more than one personal pension plan with different providers, in order to get the best returns.

move the accumulated fund at retirement to the provider which will provide the best annuity rate.

accumulate his fund with one provider but get personal pension term assurance from another.

11 / 13

If a customer is contributing to an occupational pension scheme and wishes to also start a stakeholder pension, what is the maximum amount of income per annum that they can have earned in the last year?

£24,300

£17,010

£3,600

No limit

12 / 13

Which of these statements is INCORRECT in relation to an ISA?

Growth of the fund is tax free in the hands of the investor

Dividends paid into an ISA are paid without deduction of income tax

The maximum contribution per tax year is £20,000.

Joint ISAs can now be taken under the new rules

13 / 13

What is the HIGHEST rate of tax relief in total that can be granted to personal pension contributions?

100%

20%

40%

45%

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