CISI IAD Investment Risk and Taxation

Question 1

For the 2025/26 tax year, what is the annual ISA subscription limit for an adult in the UK?

Accepted Answer

£20,000

Answer

£15,000

Answer

£25,000

Answer

£40,000

Question 2

What is the current annual exempt amount for Capital Gains Tax (CGT) for individuals in the UK for 2025/26?

Accepted Answer

£3,000

Answer

£12,300

Answer

£6,000

Answer

£1,000

Question 3

Which of the following best describes 'systematic risk'?

Accepted Answer

Market-wide risk that affects all securities and cannot be diversified away

Answer

Risk specific to a single company that can be eliminated through diversification

Answer

The risk of a broker failing to settle a trade

Answer

Operational risk within an investment management firm

Question 4

A client sells shares for a gain of £15,000 in the 2025/26 tax year. After using their CGT annual exempt amount of £3,000, at what rate would a higher-rate taxpayer pay CGT on the remaining gain?

Accepted Answer

20%

Answer

10%

Answer

18%

Answer

24%

Question 5

What is 'pound cost averaging' and when is it most beneficial?

Accepted Answer

Investing regular fixed amounts to smooth out the average purchase price over time, particularly beneficial in volatile markets

Answer

Investing a lump sum at the lowest point in the market cycle

Answer

Converting foreign currency investments back to sterling at regular intervals

Answer

Rebalancing a portfolio to maintain equal pound weightings

Question 6

Which of the following investments is exempt from UK Income Tax?

Accepted Answer

Returns from a qualifying Venture Capital Trust (VCT)

Answer

Dividends from UK equities held directly

Answer

Interest from a Corporate Bond held outside an ISA

Answer

Rental income from a buy-to-let property