CGT Flashcards
If a senior manager action or inaction amounts to reckless misconduct what is the max prison sentence?
7 years or an unlimited fine
Who is responsible for the FSCS?
PRA and FCA
How is CGT calculated?
Tell me about the tax relief available to BTL landlords and the furniture replacement relief allowance
How long after your spouse has died do you have to register APS
For Cash APS’ you have 3 years from the date the person has died or 180days after administration of the estate is complete
For stocks and share ISA’s you have 180days after administration of the estate is complete only
What are the minimum ages for investing in the following:
a stocks and shares ISA
Innovative Finance ISA
Lifetime ISA
Cash ISA
What is an innovative finance ISA?
a stocks and shares ISA = 18years
Innovative Finance ISA = 18years
Lifetime ISA = 18y and max age 40y
Cash ISA = 16 years
An innovative finance ISA is an ISA that involves investing via a peer2peer lender
What is the max annual charge got stakeholder Child Trust Funds?
1.5%
Who is the mortgagor?
Who is the mortgagee?
mortgagor = the individual borrower who transfers their property to the lender for the duration of the loan
Mortgagee = the lender
Borrowers of mortgages have to covenant
What does this mean?
Means the borrower promises to maintain the property in good confidence
How can pensions be used as mortgage repayment vehicles
What is the downside of this method?
PP and stake holder pensions can be used as mortgage repayments vehicles
This is because they have PCLS (25% tax free withdrawal ) which can be used to repay the mortgage
There are some commensense downsides but 2 hard ones to remember are:
Need for separate life assurance ( this is something u don’t need to worry about with endowments)
Issue of Assignment. As with all pension contracts they cannot be assigned to a third party for any purpose, including security for loan. Therefore lender cannot take possession if the pension to receive benefits directly from it. this is therefore a potential downside for lenders as more risky. ( endowments however can be assigned)
What are lifetime mortgages?
Allows a borrower to borrow a max of 55% of their property’s value
Interest is charged at the lenders respective lifetime mortgage rate
A lifetime mortgage can be arranged on a drawdown basis which allows the borrower to withdraw lumpsums.
The interest charged is ‘rolled up’ so it is only repaid when the property is sold and this also means the borrow is charged only on what is borrowed ( ie the interest doesn’t compound)
What are home reversion plans?
Homeowner sells a part or all of their property to a home reversion plan provider.
Homeowner lives rent free
When the property is sold the provider receives their share from the proceeds
Tell me the main types of equity release schemes
Lifetime mortgage
Home reversion plan
How are ‘retirement interest-only mortgages’ different and similar to equity release schemes such as a home reversion plan or a lifetime mortgage?
Similar: the outstanding debt is repaid from the proceeds of the sale of the property when the borrower dies or moves into long term care
Different: the interest is not rolled up meaning the borrower must repay the interest during the term of the mortgage and must prove they can afford to do so
What is bridging finance?
short term loan that is arranged used when a borrower wishes to move house but they have not yet sold their existing property or the money from the sale wont be ready in time for their new property
(allows them to ‘bridge’ the gap )
Two types:
closed bridging: the borrower needs the loan the buy the new property and they have a good plan to repay the bridging loan. Ie they have a reliable buyer
Open bridging: the borrower needs the loan to buy the new property and they do NOT yet have a firm buyer for their existing property
Open bridging = more risk = higher interest rates
What are limited liability partnerships
limited Liability Partnerships is one where partners have limited personal liability if the business were to collapse
They are only liable for the amount they have invested and any personal guarantees they have given ( ie a bank loan)
