AF1
Advanced Diploma in Financial Planning
Unit AF1 – Personal tax and trust planning
September 2022 examination
SPECIAL NOTICES
All questions in this paper are based on English law and practice applicable in the tax year
2022/2023, unless stated otherwise in the question, and should be answered accordingly.
It should be assumed that all individuals are domiciled and resident in the UK unless
otherwise stated.
, AF1 September 2022
Unit AF1 – Personal tax and trust planning
Instructions to candidates
Read the instructions below before answering any questions
• Three hours are allowed for this paper which carries a total of 160 marks as follows:
• Section A: 80 marks
• Section B: 80 marks
• You are advised to spend approximately 90 minutes on Section A and 90 minutes on
Section B, both questions are compulsory.
• You are strongly advised to attempt all questions to gain maximum possible marks.
The number of marks allocated to each question part is given next to the question and you
should spend your time in accordance with that allocation.
• Read carefully all questions and information provided before starting to answer. Your answer
will be marked strictly in accordance with the question set.
• It is important to show all steps in a calculation, even if you have used a calculator.
• Tax tables are provided at the back of the paper.
Subject to providing sufficient detail you are advised to be as brief and concise as possible,
using note format and short sentences.
2
, AF1 September 2022
SECTION A
This question is compulsory and carries 80 marks
Read carefully all information provided in the case study before attempting the questions.
Your answers should take into account the clients’ circumstances as set out in the case study.
Please carry out ALL of the tasks (a), (b), (c), (d), (e), (f) and (g) which follow.
Question 1
Aled died on 1 May 2022. He was widowed and left two children, Annabelle aged 30 and Gethin
aged 28. He has four grandchildren, aged between 5 and 13.
Aled’s wife, Branwen, died three years ago, leaving £162,500 each to Annabelle and Gethin and the
remainder of her estate to Aled.
On 1 February 2012 Aled made a gift of £175,000 into a discretionary trust and on 1 December 2017
he made a gift of £250,000 to Annabelle. He had made no other lifetime gifts.
His estate comprised of the following assets:
Asset Value at date of death (£)
Main residence 550,000
AIM Share Portfolio – purchased 1 September 2018 85,000
Cash ISA 200,000
Onshore Investment Bond 130,000
Current Account 25,000
Aled directed £300,000 of his estate into a Discretionary Will Trust, with the remaining estate split
between Annabelle and Gethin, who are both basic-rate taxpayers.
Annabelle and Gethin were the executors of Aled’s estate. During the administration of the estate,
they surrendered Aled’s Onshore Investment Bond on 1 June 2022. The Investment Bond was set
up on 31 January 2015, on Annabelle and Gethin’s joint lives, with an initial investment of £80,000.
The final surrender value was £130,000 and no withdrawals had been taken.
Annabelle and Gethin are the trustees of the Discretionary Will Trust. The trust is currently
comprised entirely of cash, which they would like to invest for the benefit of their children until they
are aged 18, whilst also retaining the option to access funds earlier for education purposes.
Gethin used part of the inheritance from his father as a deposit towards the purchase of a second
investment property, Rose Cottage, in England. The purchase was made on 1 August 2022 and the
purchase price was £275,000.
Gethin is considering whether to use the cottage as a buy-to-let or as a furnished holiday let (FHL),
although he is concerned the qualifying conditions may not be met in the first few years of letting
the property. Gethin already owns an established qualifying FHL which has confirmed bookings
totalling 165 days in the 2022/2023 tax year.
3
Advanced Diploma in Financial Planning
Unit AF1 – Personal tax and trust planning
September 2022 examination
SPECIAL NOTICES
All questions in this paper are based on English law and practice applicable in the tax year
2022/2023, unless stated otherwise in the question, and should be answered accordingly.
It should be assumed that all individuals are domiciled and resident in the UK unless
otherwise stated.
, AF1 September 2022
Unit AF1 – Personal tax and trust planning
Instructions to candidates
Read the instructions below before answering any questions
• Three hours are allowed for this paper which carries a total of 160 marks as follows:
• Section A: 80 marks
• Section B: 80 marks
• You are advised to spend approximately 90 minutes on Section A and 90 minutes on
Section B, both questions are compulsory.
• You are strongly advised to attempt all questions to gain maximum possible marks.
The number of marks allocated to each question part is given next to the question and you
should spend your time in accordance with that allocation.
• Read carefully all questions and information provided before starting to answer. Your answer
will be marked strictly in accordance with the question set.
• It is important to show all steps in a calculation, even if you have used a calculator.
• Tax tables are provided at the back of the paper.
Subject to providing sufficient detail you are advised to be as brief and concise as possible,
using note format and short sentences.
2
, AF1 September 2022
SECTION A
This question is compulsory and carries 80 marks
Read carefully all information provided in the case study before attempting the questions.
Your answers should take into account the clients’ circumstances as set out in the case study.
Please carry out ALL of the tasks (a), (b), (c), (d), (e), (f) and (g) which follow.
Question 1
Aled died on 1 May 2022. He was widowed and left two children, Annabelle aged 30 and Gethin
aged 28. He has four grandchildren, aged between 5 and 13.
Aled’s wife, Branwen, died three years ago, leaving £162,500 each to Annabelle and Gethin and the
remainder of her estate to Aled.
On 1 February 2012 Aled made a gift of £175,000 into a discretionary trust and on 1 December 2017
he made a gift of £250,000 to Annabelle. He had made no other lifetime gifts.
His estate comprised of the following assets:
Asset Value at date of death (£)
Main residence 550,000
AIM Share Portfolio – purchased 1 September 2018 85,000
Cash ISA 200,000
Onshore Investment Bond 130,000
Current Account 25,000
Aled directed £300,000 of his estate into a Discretionary Will Trust, with the remaining estate split
between Annabelle and Gethin, who are both basic-rate taxpayers.
Annabelle and Gethin were the executors of Aled’s estate. During the administration of the estate,
they surrendered Aled’s Onshore Investment Bond on 1 June 2022. The Investment Bond was set
up on 31 January 2015, on Annabelle and Gethin’s joint lives, with an initial investment of £80,000.
The final surrender value was £130,000 and no withdrawals had been taken.
Annabelle and Gethin are the trustees of the Discretionary Will Trust. The trust is currently
comprised entirely of cash, which they would like to invest for the benefit of their children until they
are aged 18, whilst also retaining the option to access funds earlier for education purposes.
Gethin used part of the inheritance from his father as a deposit towards the purchase of a second
investment property, Rose Cottage, in England. The purchase was made on 1 August 2022 and the
purchase price was £275,000.
Gethin is considering whether to use the cottage as a buy-to-let or as a furnished holiday let (FHL),
although he is concerned the qualifying conditions may not be met in the first few years of letting
the property. Gethin already owns an established qualifying FHL which has confirmed bookings
totalling 165 days in the 2022/2023 tax year.
3
