ACCA F6 : Taxation And Pension Contributions! Trivia Quiz

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Questions: 14 | Attempts: 286 | Updated: Mar 21, 2023

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ACCA F6 : Taxation And Pension Contributions! Trivia Quiz - Quiz

MCQ quiz of Chapter 5 of ACCA F6 Taxation (Pension)

Questions and Answers

1.

Two types of pension are Personal Pension and __________ Pension.
- A.
  
  Job
- B.
  
  Work
- C.
  
  Occupational
- D.
  
  Professional
Correct Answer
C. Occupational

Explanation
Explanation: Pension purchased privately by an individual, whether employed, self-employed or else, is called Personal Pension Scheme. Pension arrangement created by the employer is known as Occupational Pension.

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2.

_______________ is also known as Money Purchase Scheme.
- A.
  
  Personal Pension
- B.
  
  Occupational Pension
- C.
  
  Defined Benefit
- D.
  
  Defined Contribution
Correct Answer
D. Defined Contribution

Explanation
Explanation: Occupational Pension Scheme could be Defined Benefit or Defined Contribution scheme (Money Purchase Scheme). Defined benefit (also known as final salary scheme) is a scheme where employee contributes a part of his earnings and the benefits are based on the final salary being drawn by an employee. Money purchase/ defined contribution scheme builds the contributions over years and these are returned to the pensioner based on the performance of investment and total contribution.

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3.

An individual can contribute in __________ pension scheme(s) subject to certain limits.
- A.
  
  More than one
- B.
  
  Only One
- C.
  
  Less than one
Correct Answer
A. More than one

Explanation
Explanation: An individual can actually contribute towards more than one pension schemes.

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4.

Tax relievable pension contributions can be made by a person under the age of:
- A.
  
  55
- B.
  
  65
- C.
  
  75
- D.
  
  85
Correct Answer
C. 75

Explanation
Explanation: Pension contributions can be made by a person aged less than 75 years of age.

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5.

The minimum amount of pension contributions that can be made by anyone (less than 75) is:
- A.
  
  £1,000
- B.
  
  £2,500
- C.
  
  £3,600
- D.
  
  £10,000
Correct Answer
C. £3,600

Explanation
Explanation: Anyone can make pension contributions up to £3,600.

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6.

Relevant earnings, in respect of an individual for pension contributions, is broadly:
- A.
  
  Employment Income, Trading Income and Furnished Holiday Lettings
- B.
  
  Employment Income, Trading Income and Rental Income
- C.
  
  Employment Income, Trading Income and Patent & Royalties
- D.
  
  Employment Income, Trading Income and Dividends
Correct Answer
A. Employment Income, Trading Income and Furnished Holiday Lettings

Explanation
Explanation: Relevant earnings broadly comprise of Employment & Trading Income and Income from Furnished Holiday Lettings.

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7.

Romeo earned £10,000 from his employment, £5,000 from self-employment, £2,000 gross from dividends and £3,000 net from Building Society Interest. The maximum contribution that attracts tax relief is:
- A.
  
  £3,600
- B.
  
  £10,000
- C.
  
  £15,000
- D.
  
  £20,000
Correct Answer
C. £15,000

Explanation
Explanation: Maximum pension contributions attracting tax relief is greater of £3,600 or relevant earnings which are income from employment, self-employment and furnished holiday lettings. In this case, it is 10,000 + 5,000 = £15,000.

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8.

If a person with relevant earnings of £15,000 pays £10,000 to an HMRC approved pension scheme (personal); his pension fund will increase by:
- A.
  
  £3,600
- B.
  
  £10,000
- C.
  
  £12,500
- D.
  
  £15,000
Correct Answer
C. £12,500

Explanation
Explanation: Payment up to the higher of relevant earnings or £3,600 is deemed to be made net of 20%. Hence, in this case, the person pays £10,000 and will be considered to be paying net off basic rate tax. Hence his fund will increase by £12,500 that is 10,000 X 100/80.

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9.

Annual allowance (maximum amount that can be contributed each year) for £2011/12 is:
- A.
  
  £25,000
- B.
  
  £50,000
- C.
  
  £75,000
- D.
  
  £ 80,000
Correct Answer
B. £50,000

Explanation
Explanation: Maximum pension contributions in a tax year are £50,000 for tax year 2011/12. Unused limit can be carried forward to 3 years.

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10.

George contributed £30,000, £40,000, £50,000 and £60,000 gross personal pension contributions in the tax years 2007/08, 2008/09, 2009/10 and 2010/11. What is the maximum contribution the person can make in 2011/12 attracting tax relief?
- A.
  
  £40,000
- B.
  
  £50,000
- C.
  
  £60,000
- D.
  
  £70,000
Correct Answer
C. £60,000

Explanation
Explanation: Annual allowance can be carried forward to a maximum of three years. Unused allowance for 2007/08 can be carried forward to 2008/09, 2009/10 and 2010/11. The excess of £2010/11 will be covered by the unused allowance of £2007/08. For 2011/12, the unused allowance for 2008/09 can be used which is £10,000. Hence the total is 50,000 + 10,000 = £60,000.

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11.

Trow made £5,000 contributions in excess of the annual allowance who is additional rate taxpayer. The treatment of the excess of contribution over the annual allowance is:
- A.
  
  £5,000 will be considered as non-savings income and he will pay tax on the same
- B.
  
  There will be no additional tax payable
- C.
  
  £5,000 will be reduced from the non-savings income
- D.
  
  £5,000 will be deducted from the annual allowance of next year
Correct Answer
A. £5,000 will be considered as non-savings income and he will pay tax on the same

Explanation
Explanation: Excess contributions are added in non-savings income and are taxed accordingly.

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1
0
12.

Pension fund can be utilized when a person reaches the age of:
- A.
  
  45
- B.
  
  55
- C.
  
  65
- D.
  
  75
Correct Answer
B. 55

Explanation
Explanation: Pension funds can be used when the person reaches the age of 55.

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13.

Lifetime allowance for 2011/12 is:
- A.
  
  £1,000,000
- B.
  
  £1,400,000
- C.
  
  £1,800,000
- D.
  
  £2,200,000
Correct Answer
C. £1,800,000

Explanation
Explanation: Lifetime allowance is £1,800,000.

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14.

If the pension fund exceeds annual allowance at the time benefit is started (vested), the excess over £1,800,000 will give rise to:
- A.
  
  Excess being penalized at 10%
- B.
  
  55% taxed if excess value withdrawn
- C.
  
  25% taxed if excess value withdrawn
- D.
  
  All taxed at 10%
Correct Answer
B. 55% taxed if excess value withdrawn

Explanation
Explanation: If the pension fund exceeds £1,800,000 when “vested”, the excess is charged at 55% if funds are withdrawn and 25% if funds are left in scheme to provide annuity.

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Current Version
Mar 21, 2023

Quiz Edited by
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Feb 28, 2012

Quiz Created by
LFTC2011

ACCA F6 : Taxation And Pension Contributions! Trivia Quiz

Two types of pension are Personal Pension and __________ Pension.

_______________ is also known as Money Purchase Scheme.

An individual can contribute in __________ pension scheme(s) subject to certain limits.

Tax relievable pension contributions can be made by a person under the age of:

The minimum amount of pension contributions that can be made by anyone (less than 75) is:

Relevant earnings, in respect of an individual for pension contributions, is broadly:

Romeo earned £10,000 from his employment, £5,000 from self-employment, £2,000 gross from dividends and £3,000 net from Building Society Interest. The maximum contribution that attracts tax relief is:

If a person with relevant earnings of £15,000 pays £10,000 to an HMRC approved pension scheme (personal); his pension fund will increase by:

Annual allowance (maximum amount that can be contributed each year) for £2011/12 is:

George contributed £30,000, £40,000, £50,000 and £60,000 gross personal pension contributions in the tax years 2007/08, 2008/09, 2009/10 and 2010/11. What is the maximum contribution the person can make in 2011/12 attracting tax relief?

Trow made £5,000 contributions in excess of the annual allowance who is additional rate taxpayer. The treatment of the excess of contribution over the annual allowance is:

Pension fund can be utilized when a person reaches the age of:

Lifetime allowance for 2011/12 is:

If the pension fund exceeds annual allowance at the time benefit is started (vested), the excess over £1,800,000 will give rise to: