9 - Direct Investments Flashcards
What are some direct investments
Cash
Gilts/Fixed interest instruments
Individual Property
Individual shares or equities
What are some indirect investments?
ISAs
Collectives
Life assurance
Pensions
What is PSA
£1,000 Basic rate
£500 Higher
0 - Additional
How is bank account/building society and NS&I interest paid?
Gross
What are the two types of NS&I Bank accounts
What are the key differences?
Investment Account
Direct Saver Account
Direct Saver - 16+ -> Investment account can be managed for 16 and under by parents
Direct Saver - Higher IR
Direct Saver - Only managed online/telephone
Investment Account - min £20 and max £1million - joint
Direct saver - min £1 and max £2m or £4m joint
Both can withdraw no notice and policy
NS&I Saving certificates -> What is the terms and conditions/payout for these certificates?
Fixed interest certificates
Index-linked saving certificates
Fixed interest - Up to 5 years - lump sum investment, tax-free interest added
Index- linked -> Up to 5 years - Lower interest rates - takes into account inflation
NS&I Green Income bonds - how are these paid
What are the conditions to obtain one?
Pay interest monthly at variable rate
Taxed at savings income
Can be withdrawn anytime - no notice
16+
Min investment £500. max of £1million
NS&I Green saving bonds - How are paid/ Conditions to obtain one
3 YEAR TERM - 4.2% Interest
No withdrawls until 3 years
16+
Min income £100 - Max of £100,000
NS&I Guaranteed Income and Growth Bonds - How are paid/conditions
**Fixed rate saving bonds - fixed rate of interest*
Guaranteed income: Monthly income
Guaranteed Growth Interest is reinvested
Interest taxed as saving income
Terms:
1 Year term
NO withdrawls until end of 1 year
Can ONLY be done ONLINE
Min invest - £500 max £1m
NS&I Direct ISA - when is interest added/ how can obtain one
Interest credited on 5th April
TAX FREE
Min deposit **£1*
NS&I Premium Bonds - what are they?
Pay Prizes rather than fixed returns
Capital Protected - average prize fund interest of 3.3%
Monthly prizes - £25 - £1m are tax free
Cashed in at anytime no notice/penalty
Min holding - £25 - max holding £50,000
Attractive for higher earners
How often are Gilts paid
Twice a year and gross
How is interest paid on corporate bonds?
Interest paid gross
How is interest paid on Local Authority Bonds
Interest paid gross
How are Shares Taxed - if shares grow
CGT
How are Dividends paid in UK
Gross subject to Dividend allowance
0.875% - Basic
33.75% - Higher
39.35% - Additional
How is a Stock dividend differently taxed to a Cash
Stock Dividend - Equivalent of cash dividend - just used interest to purchase new stock
Taxed in same way as if client was receiving interest as cash
How are overseas dividends taxed?
Liable to income tax - same rate of dividend
What is the limit for cash basis in property
Rental income does not exceed £150,000
How much is the Annual investment allowance
First £1m of expenditure on plant and machinery allowance
What is the premium on short leases - Conditions
When Lease is granted for less than 50 years
Proportion of 50 years is taxed
What is a reverse premium
Sum paid by a landlord to induce tenant to take out lease
-** Tenant is taxable on premium **
What is the business asset disposal relief rates?
10% instead of -> up to lifetime limit of £1m
18%: residential property gains within the basic rate band;
20%: non-residential property gains above the basic rate band; or
28%: residential property gains above the basic rate band.
What are furnished holiday letting relief?
210 days - available in total per year
105 in total per year let
No more than 155 days in total per year
What about woodlands? What are the tax advantages?
Propefits generated are exempt from income tax
IHT can be postponed if Woodland owned for 5+ years
Woodlands are also exempt from CGT
