To claim your CPD certificate, test your knowledge with the questions below.
Write down your answers to each of the following questions and check your answers when you click to claim your CPD certificate on the link below
1. An absolute gift trust is set up by Mr Johnson for the benefit of his daughter Alison who is aged 8. The trust invests in an OEIC which has generated £1,000 of dividend income in the current tax year. Who is assessed on this income?
a) Alison because she is the sole beneficiary
b) Mr and Mrs Johnson because they are the trustees
c) Mr Johnson because he is the settlor and is alive and UK resident
d) Mr Johnson because he is the settlor and the income exceeds £100
2. What is the following statements relating the tax treatment of income received by trustees of an Interest in Possession trust is false?
a) The beneficiary with the interest in possession is assessed on the income in the tax year it arises
b) No one is assessed on income until trustees use their discretion to distribute income to a beneficiary
c) The trustees are assessed on the income in the tax year it arises
d) Both the trustees and beneficiary with the interest in possession are assessed on income in the tax year it arises
3. Husband and wife, Tim and Sally, set up a discretionary gift trust in 2020. The trustees decide to invest into an investment bond. Tim passes away in 2023. There is a chargeable event within the trust resulting in a chargeable gain of £100,000 in the 2025/26 tax year. Who is assessed on the chargeable gain?
a) Tim is assessed on the full gain
b) Sally is assessed on the full gain
c) Sally is assessed on half of the gain. The other half is assessed on the trustees.
d) Sally is assessed half the gain. The other half is assessed on Tim’s estate.
