How to pass AF1 first time: 13 tips for exam luck

Looking at the technical areas that are typically covered and becoming familiar with past questions can be just as important as internalising textbook knowledge

Most people want to pass their AF exam at the first attempt. And the good news is the AF1 exam is very doable if you prepare in the right way. Out of the four ‘technical’ AF exams (AF1, 2, 4 and 7), AF1 is statistically the easiest exam, with a pass rate of 55.6% (in 2018).

Here is what you can learn about AF1 by looking at past exam papers, the technical areas typically covered, the types of questions you will have to be familiar with, and five quick tips on revision.

Most people want to pass their AF exam at the first attempt. And the good news is the AF1 exam is very doable if you prepare in the right way. Out of the four ‘technical’ AF exams (AF1, 2, 4 and 7), AF1 is statistically the easiest exam, with a pass rate of 55.6% (in 2018).

Here is what you can learn about AF1 by looking at past exam papers, the technical areas typically covered, the types of questions you will have to be familiar with, and five quick tips on revision.

October 2018 AF1 exam paper

Working through past exam papers is one of the best ways to prepare for any exam, and AF1 is no exception. It develops technical knowledge and makes you familiar with the all-important exam technique. It can also help you focus on key revision areas.

The AF1 exam tends to cover similar areas (albeit in a different way) from one exam to the next. Looking at the last AF1 exam paper, we can see:

1. The three main personal taxes were all covered. The marks were split between them as follows: income tax around 26%; capital gains tax (CGT) around 7%; and inheritance tax (IHT) around 10%.

2. Around 26% of the marks were awarded for undertaking a calculation on these three taxes (or explaining the steps required to do the calculation).

These calculation questions can be quite chunky, so you cannot afford to do badly on them. In the April 2018 AF1 exam, 41 marks – a quarter of the marks available – were awarded for calculations.

So to be successful with AF1, you will need to be comfortable with undertaking calculations on the three personal taxes: income tax, CGT and IHT. In particular, make sure you are comfortable with undertaking an income tax calculation that includes things such as the treatment of venture capital trusts (VCT), pension contributions and employee taxable benefits such as car benefit. An income tax calculation in AF1 is likely to go beyond a basic tax calculation.

Whenever you undertake a calculation in an AF1 exam, marks are awarded for demonstrating the correct process. This means your calculation should be laid out clearly. One way of doing so is to label each stage of the process. This shows the examiners you know the process, and you will get marks even if the figures are incorrect. In other words, you can get most of the marks even if you get the wrong answer. A little bit of technique can go a long way.

AF1 exam: question types

The types of questions used in the AF1 are also reasonably predictable. In the October 2018 paper, the following instructions were used:

List or state

These totalled around 7.5% of the marks. With this type of question, it is not necessary to provide an explanation. A short answer with a few words is enough to get the marks.

Detail, describe or explain

These amounted to a whopping 51% of the marks. With this type of question, the examiners want you to show your knowledge.

You will be rewarded for giving more detail and relating your answer to the information provided in the case study. Case study information is provided in the exam for a reason – and it is not just to pad out the question. If you give a generic answer, you will lose many of the marks.

Remember: the examiners will expect you to use the information provided in some way.

Calculate

As mentioned, you will need to be comfortable with these. They total around 26% of the marks.

Benefits and factors

These are worth six and nine marks respectively. If you are asked for the benefits of taking some action, you are not being asked to put down any drawbacks. These will not score any marks.

Many people also struggle with factors questions. Speak to an examiner and they will say: ‘a factors question is not a fact-find question’. Nor should you make recommendations.

Factors questions ask you to analyse the client’s circumstances. In other words, it is the part of the advice process after the fact-find meeting and before recommendations are made. Explain the elements that would influence the advice you would ultimately provide.

Other areas

Past performance is not a guide to future performance. Likewise, a technical exam at degree standard like AF1 will test across its syllabus, which is broad. Having said this, looking at past AF1 exam papers will again show that some areas are repeatedly examined.

Examiners are likely to test some ‘fringe’ areas of the syllabus that only those that are better prepared will answer. But you should still see some familiar themes in your April AF1 exam.

In addition to the three personal taxes, the following areas have also been regularly tested in AF1:

  •  trust taxation: income tax, CGT and IHT;
  • bankruptcy;
  • taxation of investments (e.g. real estate investment trust, onshore and offshore investment bonds, enterprise investment scheme and VCTs);
  • wills and intestacy;
  • powers of attorney and lasting powers of attorney;
  • national insurance contributions;
  • employed and self-employed tax status; and,
  • residency and domicile.

Revision tips

The Chartered Insurance Institute (CII) recommends around 150 hours of study for AF1. Unfortunately, there are few shortcuts, and most people will need a significant amount of study to ensure they are successful on their first try.

Here are five suggestions for how you can work smarter, rather than harder.

1. Make a plan

Over a five-week period, the recommended 150 hours of study amounts to a sizeable 30 hours per week. If you have not already started your study, this is a big commitment and you will have to be smart with your revision. Whatever your circumstances, study will need to be planned and structured around your other commitments. However desperate you are to pass the exam, get your life, work and study balance right, and allow time for family and downtime.

2. You learn best by doing

The CII enrolment for AF1 will include study texts. Use these as reference sources and do not try to read them cover to cover. Reading is a passive activity and you are likely to retain little of what you read. So what should you do? Here are some thoughts:

  • complete past exam papers under exam conditions. Start off with the questions and a blank sheet of paper and work through the exam paper. In the exam, you have approximately a mark a minute. So if you have 30 minutes for revision, attempt 30 marks worth of questions;
  • write summary notes;
  • write memory cards or use Brainscape, a free electronic version of memory cards;
  • get colleagues to verbally test you.

3. Bitesize chunks

Whether you study over the weeks before the exam or take three days off before the exam to cram, this tip still applies. We are only capable of concentrating for 20 to 30 minutes, so take regular breaks. Even if you are cramming last minute, still do this. When you take a break, spend 10 or 15 minutes doing something completely unrelated and then get back into your study.

4. It is not all about knowledge

People who fail AF1 by 5%-10% will probably know just as much as some of the people who pass AF1. The difference is technique. Make sure you practise answering the types of questions by looking and completing a range of past exam papers. They are available as part of the CII’s exam enrolment package.

5. Treats and rewards

Some people like revision, but most do not. Make sure you reward your commitment to the cause with a treat or two. If you start to become disheartened, talk to other people in a similar position and focus on how you will benefit when you pass the exam.

Ian Patterson is director at The Patterson Group

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