Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

R3 > Ch9 Direct Investments > Flashcards

Ch9 Direct Investments Flashcards

1
Q

What is the PSA?

A

BR - £1000
HR - £500
AR - £0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the SRB?

A

First £5000 of taxable income x 0%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Is bank/building society interest paid gross?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the features of a NS&I Investment Account?

A
  • 16+ (adult can open one on behalf of child)
  • Interest taxed as saving income
  • Min deposit £20
  • Max limit £1m/£2m joint
  • Money can be withdrawn whenever
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the features of a NS&I Direct Saver?

A
  • 16+
  • Money can be withdrawn whenever
  • Interest paid gross but taxable as savings income
  • Min deposit £1
  • Max limit £2m/£4m joint
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the features of NS&I Savings Certificates?

A
  • Not avail for new customers
  • Max holding £15k per issue
  • Fixed-interest issues = bought with lump sum and interest accumulated free of income tax & cgt
  • Index-linked issues = return linked to rate of inflation, 3/5 year terms, free of income tax & Cgt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the features of NS&I Income Bonds?

A
  • Min £500/Max £1m (£2m joint)
  • Monthly interest at variable rates
  • Taxable as savings income
  • Money can be withdrawn any time
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the features of NS&I Guaranteed Income and Growth Bonds?

A
  • Fixed rate of interest paid monthly or reinvested
  • Not avail to new customers
  • Avail in 1 or 3 year bonds
  • Min £500/Max £10,000 (£20,000 joint)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the features of NS&I Direct ISAs?

A
  • 16+
  • No withdrawal penalties
  • Interest taxable as savings income/paid gross
  • Min £1
  • CAT standard ISA (normal rules apply)
  • Variable interest
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the features of NS&I premium bonds?

A
  • Tax-free prizes rather than fixed return
  • Capital protected
  • Min £25/Max £50k
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Are gains on gilts/qualifying corporate bonds subject to CGT?

A

Not generally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Fixed interest income is taxed as what?

A

Savings income (PSA can be used)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Are losses allowable on fixed interest securities?

A

no

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the features of a gilt?

A
  • Loan to government
  • Pay fixed rate of interest, gross, bi-annually
  • Interest taxable (can elect for 20% to be deducted at source)
  • Can hold until maturity or sell via stock exchange
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the features of a corporate bond?

A
  • Loans to companies
  • Pay fixed rate of interest, gross, bi-annually
  • Traded on stock exchange if qualifying then CGT exempt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is a discounted security?

A

Securities where issue price is less than amount payable on redemption by 15% (exempt from CGT)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the features of a local authority bond?

A
  • Loans to local government authorities
  • Pay a fixed amount of interest for a short, fixed term
  • Interest paid gross but taxable
  • Qualifying corporate bonds so CGT exempt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the CGT treatment of cash bonus/free shares when a Building Society Demutualises?

A

Cash: disposal for CGT

Free shares: not subject to income tax or CGT (subject to CGT on sale)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Gains when selling shares are subject to what?

A

CGT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Are dividends paid gross on shares/

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What kind of shares carry voting rights?

A

ordinary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Shares pay income in the form of what?

A

Dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are the tax rates for dividends?

A

£2000 allowance
BR 7.5%
HR 32.5%
AR 38.1%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How can somebody spread exposure (shares)?

A

Invest in collectives

25
Q

Costs of buying and selling shares include what?

A

Stock-broker commission and Stamp Duty/Stamp Duty Reserve tax

26
Q

What is a stock dividend?

A

Shareholders receive new shares instead of a cash dividend

27
Q

What is the tax treatment of a stock dividend?

A

Treated as having received income equivalent to the cash dividend and taxed in the usual way

28
Q

Most overseas dividends are paid after the deduction of what?

A

Withholding tax

29
Q

What is an investment trust?

A
  • Ltd companies that invest shareholders’ money in other stocks and shares
  • Close ended
  • Income is received in the form of dividends
  • Interest distributions received as savings income
30
Q

Are gains subject to CGT on an investment trust?

A

yes

31
Q

What are REITs?

A

Type of investment trust that invests in property

32
Q

Income received from letting property is liable to what?

A

Income tax

33
Q

What is the tax treatment of UK and overseas property income?

A
  • All UK income is pooled and taxed as investment income

- Overseas taxed separately

34
Q

When is the cash basis used (property - tax)?

A

Income before expenses does not exceed £150,000

35
Q

What is the property allowance?

A

£1000

36
Q

Does rental income count as UK earnings for pension contributions?

A

No - unless furnished holiday letting

37
Q

Is the cost of alterations and improvements on a property a deductible expense?

A

No

38
Q

Is the cost of repairs and maintenance on a property a deductible expense?

A

Yes

39
Q

Is interest paid on a loan for purposes of property letting a deductible expense?

A

Yes - finance costs in relation to residential property restricted to BR deduction

40
Q

When does the BR tax deduction limit on a loan for property letting, not applicable?

A

Loan relates to furnished holiday lettings or non-residential property

41
Q

What expenses are deductible in property letting?

A
  • Repairs and maintenance
  • Legal fees
  • Professional charges
  • Buildings insurance, water rates, council tax (if paid by landlord)
  • Services provided by landlord
42
Q

What does plant and machinery include (property letting)?

A

Equipment, furniture/machines (in commercial property) or tools

43
Q

What is the Annual Investment Allowance for Plant and Machinary?

A

Before Dec 2021 - 100% up to £1m

After Dec 2021 - 100% up to £200k

44
Q

Expenditure on plant & machinery in excess of the AIA qualifies for what rate of writing down allowance?

A

18%

45
Q

What is replacement furniture relief?

A

Landlords of residential property can deduct costs for the replacement of furnishings in residential properties

46
Q

What is replacement furniture relief limited to?

A

Cost of replacement + cost of disposal - selling proceeds

47
Q

What is the Basis Of Assessment for property?

A
  • Letting income is taxable in the year in which it arises
  • Accounts have to be prepared for the actual tax year
  • Tax is payable under HMRC
48
Q

What is the tax treatment of a premium on a lease (less than 50 years)?

A

Taxable as rent

49
Q

How do you find the taxable amount on a premium of a lease < 50 years?

A

Premium reduced by:

(No of complete years - 1) x 2% x premium

50
Q

What is a reverse premium?

A

a premium paid by the landlord to entice the tenant into taking up the lease

51
Q

Who is taxable on a premium (property)?

A

Tennant

52
Q

Can losses on property letting be carried forward?

A

Yes - and are done so automatically

53
Q

What letting relief is available if you let out part of home?

A

Gain on let part of property is exempt up to lesser of:

  • £40k (£80k joint)
  • Exemption of part occupied by owner
54
Q

Rent-a-room claim is available up to what amount?

A

£7,500

55
Q

What does rent-a-room relief not apply to?

A

Self-contained units or unfurnished accommodation

56
Q

What are the advantages of furnished holiday lettings?

A

1) Can make pension contributions

2) CGT rollover, holdover relief and business asset disposal relief may be avail

57
Q

What are the conditions a property must meet to qualify as furnished holiday letting?

A
  • In the UK or EEA
  • Furnished and let commercially
  • Available to let for at least 210 days in the year
  • Should be let for 105 days in the year
  • Cannot be let continuously for more than 155 days
58
Q

What tax-advantages do woodlands have?

A

Profits exempt from income tax
CGT exempt
IHT - can be postponed as long as held for 5 yrs

R3 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions