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Can be withdrawn anytime - no notice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
