Chapter 1- Customer needs and factors that affect them Flashcards
What is the purpose of an emergency fund.
provide a lump sum to meet urgent or
unexpected expenditure
State the implications for an individual’s financial planning of being deemed to be a
UK resident.
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.
Which form of Government policy uses interest rates to control increases in inflation?
Monetary policy
Types of Financial planning
Protection planning, Business Contingency Planning, Retirement planning, Later life/death planning
What are the Financial Planning needs?
Predictable events and unpredictable events
Which part of the financial lifecycle there is a highest need of financial protection?
Starting a family
What are the considerations in an individuals lifecycle?
Affordability, health, eligibility, taxation, risk
UK domicile tax implications?
liable to UK IHT on worldwide assets AND UK assets
UK resident tax implications?
liable to income tax on UK & foreign income
What is the monetary policy?
Process of controlling money supply in the UK
What is the fiscal policy?
process of balancing GOV revenues with public spending to manage the economy
HMRC collecting taxes to fund which services?
State benefits, GOV operation and administration, Defense and National Security, Law enforcement & Public Order Health & Education, infrastructure, public transportation, energy and waste management
What is the income tax allowance?
£12,570
What are the personal savings allowance?
£1,000- basic rate
£500- higher rate
What is the dividend allowance?
£2,000
what is the dividend tax rate for basic?
8.75%
what is the dividend tax rate for higher?
33.75%
what is the dividend tax rate for additional?
39.35%
What is the married couples allowance (couples born before 6th April 1935)?
£912.50
What are the 4 classes of NICs?
Class 1- employees & employers
Class 2- self-employed (flat rate)
Class 3- voluntary contributions
Class 4- self employed (driven by profits)
What is the NIC rate on earnings between £242-£967
12%
What is the NIC rate on earnings in excess of £967
2%
What is the employer class 1 NIC rate?
13.80%
What are CGT exempt assets?
ISAs
UK gilts
Main residence
Lottery/betting winnings
Chattels sold for less than £6,000
What are CGT chargeable assets?
Shares
Machinery, buildings
Buy-to-let property
Second homes
Personal possessions
What is the annual exempt amount for CGT
£12,300
Rate of CGT on chargeable gains?
up to £37,000- 10%
over £37,000- 20%
After disposing property when must CGT be paid?
Within 30 days
What are Certain Business Assets?
Assets owned in part or full by sole trader, business partner or significant shareholder +5% in a company
How many years must an asset by held to be eligible for Business Assets Disposal Relief?
2 years
What are the features of Business Asset Disposal Relief?
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.
What is the NRB?
£325,000
What is the IHT rate over the NRB?
40%
What is the IHT rate if 10% of the estate is given to charities?
36%
What is the residence NRB?
£175,000
What is the Annual exemption on lifetime transfers to reduce IHT?
£3,000 which can be carried forward for 1 tax year
small gifts- £250
What happens if the donor dies within 7 years of making the gift?
IHT is applied
When must Stamp Duty Land Tax be paid?
Within 14 days
What is the threshold for SDLT?
£250,000 residential property
£150,000 commercial property
What is the maximum property value for first time buyers?
£625,000
What is the corporation tax rate?
19%
When must the corporation tax be paid?
Within 9 months
What is the Value Added Tax (VAT) rate?
20%
