The Business School
Department of Accountancy and Finance
Personal Financial Planning
Date: Re-sit 2018
Time allowed: 2 Hours
Instructions to Candidates:
This is an unseen closed book examination, except for question 1 which has been circulated in advance.
This exam paper is made up of three sections. Candidates should answer the question in Section A and one out of two questions in each of Section B and Section C. Do not spend too much time on any one question. The question in Section A is marked out of 40 and all other questions are marked out of 30.
A calculator may be used in this exam.
Unannotated paper versions of general bi-lingual dictionaries only may be used by overseas students whose first language is not English. Subject-specific bi-lingual dictionaries are not permitted.
Access to any other materials is not permitted.
Section A – You must answer the question in this section
‘Financial Services are of especial importance to the UK economy. The vote to leave the EU has significant implications for the financial services sector.’
Discuss this statement, setting out the role of the financial services sector in the UK, its significance in terms of both GDP and global status, and the possible impact of the Brexit vote on each area.
Total 40 marks
END OF SECTION A
Section B – You must answer any ONE question from this section.
Ahmed and Sadia are a married couple with one child. They received the following income in 2016/17:
|Dividends from UK companies||5,500||3,000|
|Bank deposit interest received||1,020|
Ahmed made a payment to his personal pension of £2,400 net in 2016/17 and Sadia made a gift aid payment of £560.
Calculate the tax payable by Ahmed and Sadia for 2016/17. You are required to comment specifically on the tax treatment of the ISA interest, the personal pension payment and the gift aid payment
Total 30 marks
Xiaoyu made no gifts during 2014/15. His transfers during the next two years are as follows:
|September 2015||Gift to his cousin on the occasion of his marriage||£7,000|
|September 2015||Gift to NSPCC – UK charity||£10,000|
|February 2016||Gift of a new car worth £8,000 to his sister||£8,000|
|March 2016||Gift to a friend – Yan||£250|
|Gift to a friend – Fan||£100|
|June 2016||Gift to his uncle||£2,500|
|December 2016||Gift to a trust for the benefit of his niece and nephew||£120,000|
Total 30 marks
Section C – You must answer any ONE question from this section
There have been a number of changes to the pensions systems in the last 2 years.
Total 30 marks
You are an independent financial advisor. Gareth and Lottie Isherwood are a married couple aged 54 and 51 respectively.
Gareth works part time and Lottie works full time and they have a combined income of £45,000. They have approximately £10,000 in savings and Lottie makes personal pension contributions which will give her a pension of approximately £4,000 per annum when she retires. They have no other savings. They have 2 teenage children (aged 16 and 14) who live with them in a house worth £275,000. There is a small mortgage of £7,000 outstanding on the house which will be paid off in 2 years. They have life insurance and income protection insurance in place.
Lottie has just learned that her widowed father is seriously ill and is expected to die in the next few months. Lottie is his only child and his wife (Lottie’s mother) died 10 years ago. His estate is likely to be worth £600,000, £475,000 of which is in the value of his house.
They have asked to see you to discuss the inheritance they will receive and in particular to discuss ways in which they might invest it.
Your notes should discuss the main areas they need to consider, and outline types of investments they could consider. You are not required to make specific recommendations for individual investments, but you should indicate the approximate type of returns they could expect.
Total 30 marks
END OF EXAM PAPER
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