9 Collective Investments

Question 1

TYPES OF ISA’S

Answer 1

1 isa £15,240 CASH/EQUITY
2 JISA £4,080 per child
3 Additonal Permitted Sub (APS) allowance from Dec 2014
4 Help To Buy ISA £1200 then max £200pm if used to buy FTB give 25% max invest £12K. Max pro £250 (£450K).
5 LISA Max £4,ooopa towards FTB £145K or Retirement at 60. Gov puts 25%. There is 5% charge if withdrawn before 60 and not used to buy property.
6 Innovative Finance ISA. Allows crowd funding

Question 2

Outline Unit Trusts

Answer 2

1 Units purchased once a day
2 Limited 10% short term borrowing
3 Funds less than 60% interest bearing pay dividends
4 Bed and Breakfast must be out for 30 days

Question 3

Outline Open Ended Invest Collective (OEIC)

Answer 3

1 OEIC authorised by FSA
2 Sold/Bought usually once a day
3 Limited 10% short term borrowing
4 Unlike UT can have multi share classes

Question 4

Outline Investment Trusts

Answer 4

1 A company normally that invests in share
2 As closed ended funds
3 Issue fixed number of shares
4 No limits to borrow/Gear
5 Discounts or premium to NAV
6 narrowing discounts increase demand for shares
7 widening discounts decrease demand for shares

Question 5

What are the 5 chargeable events for non qualifying bonds?

Answer 5

1 death of a life assured
2 maturity
3 surrender or final encashment
4 certain part surrenders
5 assignment for money's worth

Question 6

Real Estate Investment Trusts (REITS)

Answer 6

2 elements
1) ring fenced property letting and must be 75% total gross profit. At beginning of each accounting period 75% of total value of assets
2) Non rind fenced business eg property management
3) At least 90% of profit from exempt business must be distributed within 12 months
REITS can borrow upto 125% covered rent
REITS are subject to CGT

Question 7

Characteristics of Structured Products

Answer 7

usually

1) stated fixed term
2) Usually early withdrawals not allowed
3) Either capital or income is 100% return of capital
4) There can be a Kick Out on maturity
5) Usually indexed linked eg FTSE linked
6) Most are subject to CGT on maturity

Question 8

VCT 8 features

Answer 8

1) Max £200K
2) 30% Income Tax Reducer
3) 5 year term
4) Must predominately shares and securities of unlisted companies
5) VCT stock exchange listed
6) At least 70% invested in new qualifying shares
7) Less then 500 employees
8) Company exposure <=£5M

Question 9

EIS Features

Answer 9

1) Max £1M
2) 30% Income Tax Reducer
3) 3 year term
4) CGT deferral back 3 years + 1 year fwd
5) Loss Relief
6) BPR

Question 10

Seed EIS

Answer 10

1) Max £100K
2) 50% Income Tax Reducer
3) 3 year term
4) no re-investment relief
5) Loss Relief
6) BPR
7) employ 25 or less people
8) less than 2 years old
9) less than £200K gross assets
10 must not exceed £15M imm before issue