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LP2 > Chapter 1- Customer needs and factors that affect them > Flashcards

Chapter 1- Customer needs and factors that affect them Flashcards

1
Q

What is the purpose of an emergency fund.

A

provide a lump sum to meet urgent or
unexpected expenditure

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2
Q

State the implications for an individual’s financial planning of being deemed to be a
UK resident.

A

The individual may be liable to UK income tax on both their UK income and foreign
income if they are deemed to be UK resident. This usually occurs if the individual
spends more than half the tax year in the UK.

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3
Q

Which form of Government policy uses interest rates to control increases in inflation?

A

Monetary policy

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4
Q

Types of Financial planning

A

Protection planning, Business Contingency Planning, Retirement planning, Later life/death planning

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5
Q

What are the Financial Planning needs?

A

Predictable events and unpredictable events

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6
Q

Which part of the financial lifecycle there is a highest need of financial protection?

A

Starting a family

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7
Q

What are the considerations in an individuals lifecycle?

A

Affordability, health, eligibility, taxation, risk

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8
Q

UK domicile tax implications?

A

liable to UK IHT on worldwide assets AND UK assets

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9
Q

UK resident tax implications?

A

liable to income tax on UK & foreign income

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10
Q

What is the monetary policy?

A

Process of controlling money supply in the UK

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11
Q

What is the fiscal policy?

A

process of balancing GOV revenues with public spending to manage the economy

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12
Q

HMRC collecting taxes to fund which services?

A

State benefits, GOV operation and administration, Defense and National Security, Law enforcement & Public Order Health & Education, infrastructure, public transportation, energy and waste management

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13
Q

What is the income tax allowance?

A

£12,570

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14
Q

What are the personal savings allowance?

A

£1,000- basic rate
£500- higher rate

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15
Q

What is the dividend allowance?

A

£2,000

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16
Q

what is the dividend tax rate for basic?

A

8.75%

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17
Q

what is the dividend tax rate for higher?

A

33.75%

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18
Q

what is the dividend tax rate for additional?

A

39.35%

19
Q

What is the married couples allowance (couples born before 6th April 1935)?

A

£912.50

20
Q

What are the 4 classes of NICs?

A

Class 1- employees & employers
Class 2- self-employed (flat rate)
Class 3- voluntary contributions
Class 4- self employed (driven by profits)

21
Q

What is the NIC rate on earnings between £242-£967

A

12%

22
Q

What is the NIC rate on earnings in excess of £967

A

2%

23
Q

What is the employer class 1 NIC rate?

A

13.80%

24
Q

What are CGT exempt assets?

A

ISAs
UK gilts
Main residence
Lottery/betting winnings
Chattels sold for less than £6,000

25
Q

What are CGT chargeable assets?

A

Shares
Machinery, buildings
Buy-to-let property
Second homes
Personal possessions

26
Q

What is the annual exempt amount for CGT

A

£12,300

27
Q

Rate of CGT on chargeable gains?

A

up to £37,000- 10%
over £37,000- 20%

28
Q

After disposing property when must CGT be paid?

A

Within 30 days

29
Q

What are Certain Business Assets?

A

Assets owned in part or full by sole trader, business partner or significant shareholder +5% in a company

30
Q

How many years must an asset by held to be eligible for Business Assets Disposal Relief?

A

2 years

31
Q

What are the features of Business Asset Disposal Relief?

A

Those who dispose of certain business assets with a lifetime limit of £1,000,000 within which CGT is applied at the lower rate of 10%. Chargeable gains in excess of the lifetime limit go back to normal CGT rates.

32
Q

What is the NRB?

A

£325,000

33
Q

What is the IHT rate over the NRB?

A

40%

34
Q

What is the IHT rate if 10% of the estate is given to charities?

A

36%

35
Q

What is the residence NRB?

A

£175,000

36
Q

What is the Annual exemption on lifetime transfers to reduce IHT?

A

£3,000 which can be carried forward for 1 tax year
small gifts- £250

37
Q

What happens if the donor dies within 7 years of making the gift?

A

IHT is applied

38
Q

When must Stamp Duty Land Tax be paid?

A

Within 14 days

39
Q

What is the threshold for SDLT?

A

£250,000 residential property
£150,000 commercial property

40
Q

What is the maximum property value for first time buyers?

A

£625,000

41
Q

What is the corporation tax rate?

A

19%

42
Q

When must the corporation tax be paid?

A

Within 9 months

43
Q

What is the Value Added Tax (VAT) rate?

A

20%

LP2 (9 decks)

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