Tag Archives: R06

Crack the Code to R06 July 2023 Success!

The case studies that will be tested in the July 2023 sitting of R06 are now available. If you haven’t seen these yet, you can download them here.

Case study is downloaded, but what do I do now?

You now have until now until Tuesday 4th July to prepare for the exam. The case studies are issued in advance of the exam for a reason – to help you prepare for the exam. This will test across a range of different aspects of financial planning that are based on two client case studies. As you will not know the actual questions you will face in the R06 exam until the day, it makes sense to prepare for any eventuality before then.

With around two weeks until the exam, you may think reading the case studies are your last chance but our audio material is over four hours long and covers all aspects of planning covered within the R06 exam. For more information or to download the audio material, click here.

What areas should I focus on in the CII R06 July 2023 exam?

Based on the case studies, we believe that you may be required in the R06 July 2023 exam to have a knowledge of the following topics:

Case Study One: Declan and Carmen
  • Further information you would need from Declan and Carmen to provide financial advice regarding income throughout retirement.
  • Advantages and disadvantages of Discretionary Trusts.
  • Recommend and justify the appropriateness of a Discretionary Trust.
  • The role of Trustees.
  • Benefits of cash-flow forecasting.
  • Information related to the Trust Registration Service.
  • EIS.
  • Holdover Relief.
Case Study Two: Sam and Kerry
  • Describing what Salary Sacrifice is.
  • Advantages and disadvantages of Salary Sacrifice.
  • Comment on current protection arrangements.
  • Positive and negatives in relation to ESG investing.
  • Describe positive and negative screening.
  • SRI.
  • Guardianship.
  • Lifetime ISAs.
  • Comment on current protection arrangement.
How does the CII R06 July 2023 exam compare with previous exams?

I have to say, there are some familiar themes. Case study one is a couple in retirement, with an objective to ensure sufficient income throughout retirement, which is nothing new. However, something that is slightly different is that both Declan and Carmen are over State pension age and already in receipt of pension income, so it’s difficult to see how the examiners may test any areas surrounding pensions. From the information already provided in case study one, I’d expect Discretionary Trusts to be tested and potentially Holdover Relief, given these are two technical areas that would link in well with the information provided in the case study.

In terms of case study two, there is a huge emphasis on protection, which again is nothing particularly new for R06. Also within the case study, there is clearly a protection shortfall for Mr and Mrs, including an over-reliance on death-in-service benefits. From technical areas within case study two, Salary Sacrifice seems the obvious one that jumps out, in addition to a clear signal towards ESG investing (covered in detail on page 3/21 of your R06 study text!). A potential outlier that may be tested from case study two is guardianship; Sam and Kelly have three young children and we know Wills are up-to-date, but there is no mention of guardianship?

What do I need to do to pass the CII July 2023 R06 exam?
  • Familiarise yourself with the clients’ circumstances, right down to remembering the names! Although the case studies that you will have in the exam are identical to what you have already, you should know their circumstances well. You should also be able to apply your knowledge to their circumstances – generic answers will not score well.
  • Revise and read around the technical aspects. Google is a good place to start or use the CII R06 study text.
  • Be familiar with the technique and style of answers the CII will want. This is NOT just about applying your day job to an exam paper. 
  • Be sure to check out our FREE downloadable podcasts here.

Best of luck with the exam!

Sam Patterson

CII exams

CII Exams: when are changes examined from?

CII exams and changes

With Budgets and Autumn Statements, legislative and tax changes happen frequently – it’s a fact of life. If we take the the recent 2022 Autumn Statement as an example,  there are a range of changes. Some of them, like SDLT, were implemented immediately in the previous infamous ‘Truss’ ‘mini-budget. Other changes (such as reducing the threshold before additional rate tax is payable)  have been announced but will not be implemented until April 2023. All potentially confusing. But more importantly, if you are sitting a CII exam, when are these changes examined from?

What happens if there are no changes?

I’ll start with a simple scenario. The standard testing period for all CII exams is from the 1st September for a period of 12 months.  This is when any syllabus changes to an exam are examined from. If you sit a R03 exam in mid-August 2023, the tax rates used will be based on the 22/23 tax year. If you sit R03 on the 5th September 2023, it will be based on the 23/24 tax year.  Taking the August 2023 example, this throws up a bit of an anomaly because you would have been using the 23/24 tax rates in work for several months. But the CII have to have a set date for a change to become effective and the 1st September is that date.

Why September? In a typical year, most tax changes become effective from the 6th April. The CII then has to update all of its exam support material, issue it to students, and give them a fair period of time to allow study before examining it. When you look at it like this, a changeover in September makes absolute sense.

Of course, this isn’t a problem with the AF exams. In 2023, the first exam sittings are in February and March (22/23 tax year). The second sitting are in September and October so these will be based on the 23/24 tax year. Hopefully, this is all clear.

CII exams and the ‘3 month rule’

I’ve just looked at the most straightforward scenario. But what happens if changes are introduced during the testing period, i.e. between September to September? This is where the ‘3 month rule’ is usually applied to CII exams.  It is fairly rare for any legislative or tax changes to be introduced immediately. With legislation, there is usually a consultation and then an implementation period. With tax changes, it does happen from time to time as we saw with changes to SDLT in September 2022. Normally, this means that any changes will not be examined by the CII until after a period of at least 3 months after changes are implemented (not from when they are announced).

What happens if changes are announced over 3 months in advance – for example those to be introduced at the start of the next tax year?  The general rule (there have been some exceptions) is that they get examined from the following September.

Example:

The 2022 Autumn Statement announced that the dividend allowance would be reduced to £1,000 in April 2023. As this falls within the 23/24 tax year, this would get tested after 1st September 2023. The Statement also announced that the allowance would be further reduced to £500 in April 2024. The CII generally do not test these changes in advance so expect this to be examined after 1st September 2024.

Legislative changes

By definition, these tend to be a little more random than tax changes. Some years there are key legislative changes such as the GDPR changes to data protection in 2018; in other years there may be little or nothing that will impact on CII exams. Again, the 3 month rule will typically apply.

Where does this leave students?

The best advice is to look on the CII website for the exam subject you intend to sit. The CII does issue qualification updates to advise you of changes in the current tax year. For example, the R03 page on the CII exams website  includes a qualification update on the right hand column. Click here. This provides a good example as it shows that the SDLT changes are examinable from the 23rd December 2022. See the AF1 website page for the position with AF1 under the heading ‘unit updates’.

If you are in any doubt, always check the relevant CII exam page for any qualification updates.

Further support for your R0 or AF exam

We provide support – like this blog – to help people pass their R0 or AF exam first time. Our material is written by ex-examiners and our audio material is written by the authors of 6 current CII study texts. That’s why we modestly like to think that we are exam experts.

Click here to see R0 specfic blogs and helpful tips

Click here to see AF specific blogs and helpful tips

Click here to access our FREE AF preparation guides

 

Prepare well, stay calm and I hope this helps with your preparation.

 

Sam Patterson,  APFS, Chartered Financial Planner

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