Welcome to the quiz
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Question 8
Question 9
Question 10
Question 11
Question 12
Answer to Question 1
Answer to Question 2
Answer to Question 3
Answer to Question 4
Answer to Question 5
Answer to Question 6
Answer to Question 7
Answer to Question 8
Answer to Question 9
Answer to Question 10
Answer to Question 11
Answer to Question 12
Areas for review
End of course
Evaluation Questionnaire for Bonds Taxation (AEGON UK)
Try this quiz to test your knowledge. You’ll find 12 questions in this module, each relating to the key subjects covered in the course.
You’ll be able to see your score as you progress through the quiz. You’ll notice that the navigation controls, only enable you to continue once you have completed each question. There’s no time limit, so take as long as you need.
Don’t worry if you get any of the questions wrong, as we’ll suggest areas for revision once you’ve completed the quiz.
Which of the following are features of bonds other than capital redemption bonds?
Option 1 – A single premium contract
Option 2 – A life policy
Option 3 – Allows tax deferral on the growth of the policy
Option 4 – Tax relief on premiums
Option 5 – Whole-of-life policy
Option 6 – Has lives assured
Which of the following statements are true? A bond is…?
Option 1 – …a form of collective investment
Option 2 – …typically written in clusters of 10, 100 or even 1,000 segments
Option 3 – … a whole-of-life single premium contract
An onshore life office’s funds must pay corporation tax. Which of the following types of income and gains within the life company’s funds are taxed at 20%?
Option 1 – Interest income
Option 2 – Capital gains
Option 3 – Dividend income
Option 4 – Rental income
How are the funds of an offshore bond taxed for an offshore life office?
Option 1 – Corporation tax
Option 2 – Capital gains tax
Option 3 – There’s no internal tax apart from some irrecoverable withholding tax
11.6 Content:
When a chargeable event occurs, a bond owned by an individual is liable to what type of tax?
Option 1 – Corporation tax
Option 2 – Income tax
How is a bond owned by a company taxed from 1st April 2008 ?
Option 1 – Corporation tax
Option 2 – Income tax
If a bond is totally surrendered or the last life assured dies then it’s classed as a chargeable event. Can you identify the other four occasions that are chargeable events?
Option 1 – Partial withdrawal across all segments within the 5% allowance
Option 2 – Assignment by sale of the bond
Option 3 – Partial withdrawal across all segments over the 5% allowance
Option 4 – Full surrender of individual segments
Option 5 – Maturity of the policy
Option 6 – Marriage of policyholder
Wendy Jackson has paid a premium of £100,000 into a bond. She’d like to take £10,000 from the bond, leaving £90,000 invested. How can she achieve this?
Option 1 – Full surrender of the policy
Option 2 – Full surrender by sale of the bond
Option 3 – Full surrender of individual segments
Option 4 – Partial withdrawal across all segments
Take a look at the following bond details. The withdrawal in year three isn’t a chargeable gain. However, what is the 5% allowance carried forward into year four?
Policy year 1, Premiums paid 50,000, 5% allowance brought forward none, 5% allowance for year 2,500, Withdrawals none, 5% allowance carried forward 2,500, Chargeable gain nil.
Policy year 2, Premiums paid 50,000, 5% allowance brought forward 2,500, 5% allowance for year 2,500, Withdrawals none, 5% allowance carried forward 5,000, Chargeable gain nil.
Policy year 3, Premiums paid 50,000, 5% allowance brought forward 5,000, 5% allowance for year 2,500, Withdrawals 5,000, 5% allowance carried forward ? Chargeable gain nil.
Option 1 – Nil
Option 2 – £2,500
Option 3 – £5,000
Option 4 – £7,500
Have a look at the two formulas below. Which one shows the calculation for working out the gain on full surrender of individual segments?
Bond details
Option 1 – Calculation A
Year 1 premium= £100,000 and 5% allowance = £5,000
Year 5 withdraw= £30,000
Minus (5% x £100,000 X 5 years) = £25,000
Gain = £5,000
Option 2 – Calculation B
Year 1 premium= £100,000 - Segmentation allocation = 10
Year 5 withdraw = £100,000 x 3 = £30,000 - Segmentation allocation = 3
10
Cost of three segments = £100,000 X 3 - £30,000
10
Gain = £nil
Is the following statement true or false?
Top slicing relief is an averaging rule that determines what fraction of the gain is liable for higher rate tax if the taxpayer is otherwise a non-higher rate taxpayer.
Option 1 – True
Option 2 – False
Which of the following statements apply to time apportionment relief?
Option 1 – Time apportionment relief applies to onshore bonds
Option 2 – Time apportionment relief applies to offshore bonds
Option 3 – Time apportionment relief gives relief for periods of non-residence
Answers to questions in module 8
Answer to Question 1
Which of the following are features of bonds other than capital redemption bonds?
Option 1 – A single premium contract
Option 2 – A life policy
Option 3 – Allows tax deferral on the growth of the policy
Option 4 – Tax relief on premiums
Option 5 – Whole-of-life policy
Option 6 – Has lives assured
Answer
Well done if you selected these five options. A bond has the following features:
Which of the following statements are true? A bond is…?
Option 1 – …a form of collective investment
Option 2 – …typically written in clusters of 10, 100 or even 1,000 segments
Option 3 – … a whole-of-life single premium contract
Answer
All options 1, 2 and 3 are the right answer. A bond is a whole-of-life single premium contract with collective investments and is typically written in clusters of 10, 100 or even 1,000 identical segments.
An onshore life office’s funds must pay corporation tax. Which of the following types of income and gains within the life company’s funds are taxed at 20%?
Option 1 – Interest income
Option 2 – Capital gains
Option 3 – Dividend income
Option 4 – Rental income
Answer (options 1, 2 & 4)
The correct answer is options 1, 2 and 4. Onshore bonds must pay corporation tax. The following three types of the life company’s income and gains are taxed at 20%:
How are the funds of an offshore bond taxed for an offshore life office?
Option 1 – Corporation tax
Option 2 – Capital gains tax
Option 3 – There’s no internal tax apart from some irrecoverable withholding tax
Answer
You’re absolutely right if you selected option 3. The funds of an offshore bond have no internal tax for the life office apart from some irrecoverable withholding tax.
11.6 Content:
When a chargeable event occurs, a bond owned by an individual is liable to what type of tax?
Option 1 – Corporation tax
Option 2 – Income tax
Answer
Option 2 is the correct answer. A bond owned by an individual is liable for income tax on a chargeable event.
How is a bond owned by a company taxed from 1st April 2008 ?
Option 1 – Corporation tax
Option 2 – Income tax
Answer
Option 1 is the right answer. A bond owned by a company is liable for corporation tax under the loan relationship rules from the first accounting period beginning on, or after, 1st April 2008.
If a bond is totally surrendered or the last life assured dies then it’s classed as a chargeable event. Can you identify the other four occasions that are chargeable events?
Option 1 – Partial withdrawal across all segments within the 5% allowance
Option 2 – Assignment by sale of the bond
Option 3 – Partial withdrawal across all segments over the 5% allowance
Option 4 – Full surrender of individual segments
Option 5 – Maturity of the policy
Option 6 – Marriage of policyholder
Answer
The correct answer are options 2, 3, 4 and 5. There are six chargeable events that can give rise to a gain on the bond:
Wendy Jackson has paid a premium of £100,000 into a bond. She’d like to take £10,000 from the bond, leaving £90,000 invested. How can she achieve this?
Option 1 – Full surrender of the policy
Option 2 – Full surrender by sale of the bond
Option 3 – Full surrender of individual segments
Option 4 – Partial withdrawal across all segments
Answer
Did you select options 3 and 4? There are two ways to take out part of the value of the bond: by full surrender of individual segments or partial withdrawal across all segments.
Take a look at the following bond details. The withdrawal in year three isn’t a chargeable gain. However, what is the 5% allowance carried forward into year four?
Policy year 1, Premiums paid 50,000, 5% allowance brought forward none, 5% allowance for year 2,500, Withdrawals none, 5% allowance carried forward 2,500, Chargeable gain nil.
Policy year 2, Premiums paid 50,000, 5% allowance brought forward 2,500, 5% allowance for year 2,500, Withdrawals none, 5% allowance carried forward 5,000, Chargeable gain nil.
Policy year 3, Premiums paid 50,000, 5% allowance brought forward 5,000, 5% allowance for year 2,500, Withdrawals 5,000, 5% allowance carried forward ? Chargeable gain nil.
Option 1 – Nil
Option 2 – £2,500
Option 3 – £5,000
Option 4 – £7,500
Answer
The correct answer is option 2. The 5% allowance carried into year four is £5,000 (carried from year two) + £2,500 (5% allowance for year three) less £5,000 withdrawal = £2,500.
Have a look at the two formulas below. Which one shows the calculation for working out the gain on full surrender of individual segments?
Bond details
Option 1 – Calculation A
Year 1 premium= £100,000 and 5% allowance = £5,000
Year 5 withdraw= £30,000
Minus (5% x £100,000 X 5 years) = £25,000
Gain = £5,000
Option 2 – Calculation B
Year 1 premium= £100,000 - Segmentation allocation = 10
Year 5 withdraw = £100,000 x 3 = £30,000 - Segmentation allocation = 3
10
Cost of three segments = £100,000 X 3 - £30,000
10
Gain = £nil
Answer
The correct answer is option 2 - B. The following formula for full surrender of individual segments is:
Year 1 premium= £100,000 - Segmentation allocation = 10
Year 5 withdraw = £100,000 x 3 = £30,000 - Segmentation allocation = 3
10
Cost of three segments = £100,000 X 3 - £30,000
10
Gain = £nil
Is the following statement true or false?
Top slicing relief is an averaging rule that determines what fraction of the gain is liable for higher rate tax if the taxpayer is otherwise a non-higher rate taxpayer.
Option 1 – True
Option 2 – False
Answer
The correct answer is option 1. If the policyholder isn’t usually a higher rate taxpayer and the addition of the gain to their other income puts them into the higher tax bracket, they may be eligible for top slicing relief. This is an averaging rule that determines the fraction of the gain, known as the slice, which is liable for higher rate tax.
Which of the following statements apply to time apportionment relief?
Option 1 – Time apportionment relief applies to onshore bonds
Option 2 – Time apportionment relief applies to offshore bonds
Option 3 – Time apportionment relief gives relief for periods of non-residence
Answer
Did you identify option 2 and 3 as the right answer? Time apportionment relief only applies to offshore bonds and gives relief for periods of non-residence.
Module 1 – Introduction to bonds taxation
Module 2 – What is a bond? relate to questions 1 and 2
Module 3 – Life office taxation relate to questions 3 and 4
Module 4 – What type of tax applies to an onshore and offshore bond? relate to questions 5 and 6
Module 5 – How to work out the gain relate to questions 7 and 8
Module6 – How to calculate a gain using the 5% rule relate to questions 9
Module 7 – How to take money from the bond relate to questions 10
Module 8 – When does a tax charge on a bond arise?
Module 9 – How to calculate tax on the gain with top slicing relate to questions 11
Module 10 – Exceptions relate to questions 12
You’ve now completed module 11 – quiz.
What do you think of Bonds Taxation training?
Please take a few minutes to fill in our evaluation form below and feedback your comments. Once you have filled in your responses please save the file and return it, either by email or post to the address shown.
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eLearning Development
AEGON UK
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Email:
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Thank you for your time. We hope you’ve enjoyed the course and that bonds taxation is no longer taxing!
Evaluation Questionnaire for Bonds Taxation (AEGON UK)
eLearning Development, AEGON UK is evaluating its Bonds Taxation web-based training. To assist with this exercise, please take a few minutes to complete this questionnaire by placing a mark against the appropriate number, statement or providing a short written comment.
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1. How would you rate the overall course?
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2. To help establish if the course was user friendly, please look at the following statements and indicate your level of agreement with each.
The interface was easy to understand (refers to layout, buttons, menu):
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3. ‘Content was presented in a logical sequence and was clear and understandable.’ To what extent do you agree with this statement?:
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4. Please indicate to what extent the course met the following objectives:
4.1 Identify the features of a bond.
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4.2 Identify the definition of ‘segmentation’ on a bond contract.
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4.3 List the four ways in which assets within an onshore life office/company’s funds are taxed.
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4.4 Identify how the funds of an offshore bond are taxed for a life office.
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4.5 State when a bond owned by an individual is liable to tax
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4.6 State when a bond owned by a company is liable to tax
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4.7 State when a bond (individual or company) is liable to capital gains tax (CGT).
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4.8 Identify occasions when chargeable events apply to a bond.
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4.9 Identify the two ways to draw money from the bond
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4.10 Identify how the 5% rule is applied to an individual bond policy for a partial withdrawal.
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4.11 Identify how other chargeable events are taxed.
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4.12 Identify the tax rules on partial withdrawals.
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4.13 Identify the tax rules on part surrender of segments.
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4.14 Recognise the definition of ‘top slicing’.
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4.15 Identify how to calculate the tax on a gain.
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4.16 Recognise the exceptions…..
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5. How effective was this course in teaching you the content?
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6. The web-based training was an effective way to deliver this training, by keeping me interested and involving me in the content.
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7. Please use the space below to make further comments on any aspect of the training.
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