10 - Indirect Investments (D) Flashcards
ISAs are open-ended investment plans. True or false?
False, they are closed-ended (they are not sold in units)
ISA managers must be HMRC approved. True or false?
True
ISA investors can be non-UK resident in what circumstance?
They can be a non-resident Crown employee working overseas or their spouse or civil partner
Individuals aged 16 and 17 can invest in which type of ISA?
Cash ISA
JISA
JISAs are available to all children who did not get a CTF. This would include any child born on or after which date?
3 January 2011
Who can contribute to a JISA and what is the 2023/24 subscription limit?
Parents, family and friends can contribute up to £9,000 in total for the 2023/24 tax year
When can a child withdraw money from their JISA?
When they turn 18
If an investor transfers their shares from an approved profit-sharing scheme or an SAYE scheme, to an ISA, how soon should this be done?
Within 90 days of receiving the shares
What is the government bonus on a H2B ISA and what is its limit?
25% bonus, up to max. £3,000 bonus on £12,000 savings
(12,000 x 25% = 3,000)
The H2B bonus is available for purchase of homes up to what amount?
London £450,000
Elsewhere £250,000
The H2B ISA can be used as the deposit for a new home. True or false?
False, the buyer must get together their own deposit and the funds from the ISA can only be used towards the purchase price.
This is because the H2B ISA funds are paid out at completion and not before.
H2B ISA
- Maximum initial deposit and maximum monthly saving thereafter?
- Minimum amount to qualify for bonus, and minimum bonus amount?
- Type of ISA (cash, stocks and shares, innovative etc.)?
- Minimum age to open?
£1,200 initial maximum followed by £200 pm maximum
£1,600 of savings to qualify for bonus, therefore £400 in bonus (25% of £1,600)
Cash ISA
Age 16
You can invest in both a H2B and cash ISA at the same time. True of false?
False - they are both cash ISAs
Lifetime ISA
- Age must the investor be to open the account?
- Annual investment limit?
- Government bonus amount, and until when?
18 - 39
£4,000
25% until age 50
Which ISA can remain open as a retirement fund after you have used it to buy your first home?
Lifetime ISA
What is the penalty amount if you withdraw funds from your lifetime ISA prematurely? (Either to use it for a purpose other than buying your first home, or withdrawing the balance before age 60 after you have bought your first home).
25% which is equivalent to the government bonus, so in effect they take the bonus back off of you
Property prices have risen significantly since the introduction of the lifetime ISA but the property caps of £250,000 and £450,000 remain. Are investors able to withdraw their funds as they are unable to afford to use them anymore?
Yes, but those locked out of using their Lifetime ISA because of higher property prices will incur the 25% penalty charge if they want to reclaim their savings before the age of 60. In effect, the rise in property prices has not had an impact on the penalty amount.
Which ISA can contain a mixture of cash and stocks and shares? H2B or lifetime?
Lifetime.
H2B is cash only.
An individual who invests in more than one type of ISA in a tax year can use the same or different providers. True or false?
True
How soon after death does an ISA remain a continuing account?
Either until the administration of the estate is complete, the ISA is closed, or 3 years and 1 day since death, whichever is sooner.
Someone age 16-17 can benefit from a £29,000 ISA investment limit, how is this possible?
There is no interaction between a stocks and shares JISA and a cash JISA, so they are allowed a £20,000 limit from the stocks and shares ISA plus £9,000 from the cash JISA.
Cash ISAs can be transferred to a stocks and shares ISA, and vice versa. True or false?
True
Why is it important that the investor shares their NI number with the ISA manager?
As the ISA manager is responsible for reporting and reclaims with HMRC and they cannot do this without the NI
Can an investor keep their ISA open if they cease to remain a UK resident?
Yes but they cannot pay any more into it until the become resident again
Why might it not be beneficial for a ‘small saver’ to invest in an ISA?
They way as well make use of the personal savings allowance first outside of an ISA (£1,000 basic rate taxpayers and £500 higher rate tax payers). If not, and they invest into an ISA, they will lose the allowances as they cannot be carried forward.
Children born between which dates were entitled to child trust funds?
After 31 August 2002, but before 3 January 2011
What is the CTF subscription limit?
£9,000, same as today’s JISA
What are the 3 types of CTFs?
- savings accounts;
- accounts that invest in shares; and
- stakeholder CTF accounts: these invest in shares but in such a way as to minimise the risk. Charges are limited to 1.5% a year.
Funds from a CTF cannot be withdrawn until the child reaches 18, except in which circumstance?
Terminal illness
You cannot place any more money into a CTF after the child turns 18. True or false?
True
Maturing CTFs can be transferred into an ISA without affecting the subscription limit. True or false?
True
CTFs run on a yearly basis for the purpose of subscription limits, but this is not the tax year? Instead, when does the year start?
Start date is the child’s birthday
If a child has a CTF, can they also have a Junior ISA?
No, but you can transfer the CTF to a JISA. The JISA replaced the CTF.
If investment income from a CTF is more than £100 gross in a tax year, where the capital came from the parent, is the parent taxed?
No
