13 - Personal Tax & Investment Advice Flashcards
Who would an ISA most likely not benefit?
Non-tax payer
When are losses offset for CGT
Must be in same tax yr
When is most likely best time to dispose of assets to limit CGT?
In a low income year as in most cases tax bracket linked to income tax
Negligible value claims
Assets that become worthless so can be written off for CGT puposes
Who are national savings certificates most appealing to and why?
Higher and additional rate tax payers due to their tax free return
When do you receive return on certificates?
At the end of the term only
Life assurance and bonds taxation treatment for life company on an onshore fund
Dividends tax rate 8.75%
Savings income tax rate 20%
Life fund it self pays these taxes however can offset costs which helps reduce their taxation cost
Qualifying life policy taxation rules
No further taxes due within fund other than usual taxes
Can use market value reduction to use as a levy
Non-qualifying policies taxation rules
Basic an non tax payers - No further tax as taxes within fund
Higher rate - additional 20% CGT upon encashment but can choose when to e cash investment
Additional rate - additional 25% CGT upon encashment but can choose when to e cash investment
Offshore life policies
Tax brackets pay CGT on encashment at income tax rates
What is max can with draw each year on a life policy investment tax free?
Cumulative 5% of original investment each year upto original investment amount tax free and do not need to declare this.
Time apportionment relief
A bondholder who has been non-resident for part of the investment period can claim a reduction to the chargeable gain.
If someone is emigrating what should you do?
Encourage them to seek local expertise as cannot advise on this
How long does someone who has emigrated keep their CGT allowance for?
Atleast 5yrs
What form do you inform HMRC on that you have left the UK?
P85 claiming non residency status and non domicile status of intend to permenant my leave the UK
If left the UK as UK dom. how long will you pay UK IHT on worldwide assets for?
5yrs
Considerations for those planning to live outside of the UK for:
- deposit accounts
- gilts
- ISA
- stocks/OEIC/UT
- investment bonds
- deposit accounts - should move offshore
- gilts - not taxed
- ISA - existing ISA can be kept but no further investment allowed and may lose tax free status in new country
- stocks/OEIC/UT - may want to dispose of losses so can then offset against future gains.
- investment bonds - HRT & ART should consider holding off cashing in until they’re a non UK resident
Considerations for those planning to live in the UK for UK domicile:
- income tax
- CGT
- IHT
- income tax - links to UK tax on arrival and PSA given from day 1. Should crystalise investments before entering UK
- CGT - Not liable if non UK resident for last 5yrs. Tax charges on date of acquisition still and not residence
- IHT - Liable to IHT on worldwide assets
Considerations for those planning to live in the UK for non-UK domicile:
- income tax
- CGT
- IHT
- income tax - only income from UK is taxable. Charge is £30k per annum so can pay charge or not pay and be taxed on arising basis. Charge rises to £60k if redident 12 of 14 last tax yrs.
- CGT - liable to CGT on UK assets. Gains outside of UK taxable on remittance basis, if no claim made then taxed on arising basis.
- IHT - only UK assets are taxable
What must you be to invest in an ISA?
UK resident
Do you pay stamp duty on purchasing AIM or fund shares?
No, they’re exempt
