Chapter 1- Customer needs and factors that affect them

Question 1

What is the purpose of an emergency fund.

Answer 1

provide a lump sum to meet urgent or
unexpected expenditure

Question 2

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

Answer 2

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.

Question 3

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

Answer 3

Monetary policy

Question 4

Types of Financial planning

Answer 4

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

Question 5

What are the Financial Planning needs?

Answer 5

Predictable events and unpredictable events

Question 6

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

Answer 6

Starting a family

Question 7

What are the considerations in an individuals lifecycle?

Answer 7

Affordability, health, eligibility, taxation, risk

Question 8

UK domicile tax implications?

Answer 8

liable to UK IHT on worldwide assets AND UK assets

Question 9

UK resident tax implications?

Answer 9

liable to income tax on UK & foreign income

Question 10

What is the monetary policy?

Answer 10

Process of controlling money supply in the UK

Question 11

What is the fiscal policy?

Answer 11

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

Question 12

HMRC collecting taxes to fund which services?

Answer 12

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

Question 13

What is the income tax allowance?

Answer 13

£12,570

Question 14

What are the personal savings allowance?

Answer 14

£1,000- basic rate
£500- higher rate

Question 15

What is the dividend allowance?

Answer 15

£2,000

Question 16

what is the dividend tax rate for basic?

Answer 16

8.75%

Question 17

what is the dividend tax rate for higher?

Answer 17

33.75%

Question 18

what is the dividend tax rate for additional?

Answer 18

39.35%

Question 19

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

Answer 19

£912.50

Question 20

What are the 4 classes of NICs?

Answer 20

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

Question 21

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

Answer 21

12%

Question 22

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

Answer 22

2%

Question 23

What is the employer class 1 NIC rate?

Answer 23

13.80%

Question 24

What are CGT exempt assets?

Answer 24

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

Question 25

What are CGT chargeable assets?

Answer 25

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

Question 26

What is the annual exempt amount for CGT

Answer 26

£12,300

Question 27

Rate of CGT on chargeable gains?

Answer 27

up to £37,000- 10% over £37,000- 20%

Question 28

After disposing property when must CGT be paid?

Answer 28

Within 30 days

Question 29

What are Certain Business Assets?

Answer 29

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

Question 30

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

Answer 30

2 years

Question 31

What are the features of Business Asset Disposal Relief?

Answer 31

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.

Question 32

What is the NRB?

Answer 32

£325,000

Question 33

What is the IHT rate over the NRB?

Answer 33

40%

Question 34

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

Answer 34

36%

Question 35

What is the residence NRB?

Answer 35

£175,000

Question 36

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

Answer 36

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

Question 37

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

Answer 37

IHT is applied

Question 38

When must Stamp Duty Land Tax be paid?

Answer 38

Within 14 days

Question 39

What is the threshold for SDLT?

Answer 39

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

Question 40

What is the maximum property value for first time buyers?

Answer 40

£625,000

Question 41

What is the corporation tax rate?

Answer 41

19%

Question 42

When must the corporation tax be paid?

Answer 42

Within 9 months

Question 43

What is the Value Added Tax (VAT) rate?

Answer 43

20%