Chapter 10 Flashcards
what tax wrappers are avliable
pension plans, isas, oiecs, life assurance
at what age is the limit to cotributing to the pensikon
75
employees/se;f employed can contribute up to
100,000
what is the life time allowance
1,073,100 - any excess takes charges
what is a crystalatisation
test against the lta
how much can you take lta
25% tax free - other income taken down from lta will be taken as income tax
how is a crystalised beneifittaxed
tacabkle - cklassied as non savigs income - cant use any allowances against pension incoem irrepective of how yu take it
what is death classed as
crystalised event
if a pension is drawing out 32,000 for first time what is the rate
32,000 x o.25 = tax free
32,000x0.75 will be taxed
24,000 = 75% - which will be taxed at 40% = 9,600
what is the cash isa accesability
from 16
are isas instat access
yes
What is the main benefit of using a tax wrapper?
Beneficial tax treatment
what is the stocks and shares isa
underlying asset - under a Unit end Trust
what uis a innoative isa
treated as a atsocks and shares isa - but avaliable from 18
is a lifetime isa part of the 20,000 annual limit
yes
when is the last age you can have one lisa
18-40
help to buy isa
you can still top u to it if yoy had it before november 2019 - maxium scubscripton of 12,000 and a it was a contract - used for first home
How many years cxan you carry forward a pension
3 years plus teh current tax year
what is the retirement date where you can claim beneifits to your pension
55
can a employers pensions still be apid whuilst working
yes
what are structured products usually linked to
the FTSE 100
are income and gains exept from tax in an isa
yes
what ar ethe limitids of an isa
20,000
what is teh eligibility fr an isa
must be a uk residnet - 18 - not held jintly
what if icnoem is reieved by a jisa - what haopens
anything more than a 100 gross is net as taxed as parents income
what types of isas are tehre
junior, lifetime, innoative, stcoks and shares, cash
what can stocks and shares invest in
they may invest in oeics, Uk UCITs, aim listed, sec urity shares, coporate bonds - cash - lief assurance policeies - shares listed on recofnised platfiorms
what is a cash isa invetsed in
banks or buidling societies
what investment opportunties does a jisa have
same as a normal isa
what is an innoative isa
- peer ro peer lending, sharia compliant
connecting lenders with borrowers
what replaced teh helped to buy isa
the LISA
when cant you open a LISA
when youre 40 or odler
what happens when a spouse dies and they have an isa
the isa is inhertied by the oteh rspouse, they can conntribute without it going into tehir allowances
who are isas suitabkle for
those who have used up their allowances or an ADR
when was a CTF abolished
2011 - replaced by the JISA
what is the tax treatment of inceom on an isa
receieved free of inocem and cgt - more than £ 100 charged to the parent if held in a Jisa
what do OEICS and Unit trusts allow
they allow individuals to particpaite in a large portfolio of shaes
how can a uk colletcive be bought in
can be held in tax wrappers such as pensions and isas
what are the differnces between how Uk collectives are taxed and direct investments
unit trusts and OEICs are openended.
Units or shares are issued when investors invest
and liquidated
taxation of dividends from OEICs and equity uni
where are offshiore collectives et up
with there is little to no tax - channel islands 0 luxembirg
who would be suitabkle for offshore collectives
non uk residents
how are reporting funs taxed
declares as income on self assesmnet - they must be applied to HMRC
how are equity distributions taxed
as dividend rates
how are interest distributiosn taxed
as savings - from 0% 20 40 45
is there a personao allowance on interest distrinutions
yes
ultimatley how are they taxed - reporting funds
taxed the same as uk collectices
what about a non reportiung fund do they have stauts
no - the do not have reporting status
how are non reporting funds taxed
Income is not taxed as it arises, only on
disposal of units/shares
basiclaly when they are sold
what happens if one dies and they hold an non reporting fund
calcualted off cgt principles
as non reporting funds have income within it how is this taxed
will constitute towards part of the gain
as it is opart of the gain what is the rate liable to
to income tax it is charged
at the 20% basic rate, the 40% higher rate or the
45% additional rate.
what is the differences between non reporting funds and reporting funds
non reporting funds have some advantages
what are the advantages iwth on reporting funds
Income can grow faster in a low-tax environment.
UK investors can defer paying tax on income and profits made offshore until they bring them back to the UK.
Offshore investments are exempt from UK inheritance tax (IHT) for non-UK domiciled investors.
what is teh tax treatment of an offshore fund
dividends
it receives will usually be subject to a non-reclaimable
withholding tax
Fixed-interest funds are usually more tax efficient for
UK-resident investors because these funds choose
investments, such as Eurobonds and exempt gilts, which
pay income gross.
* Some jurisdictions levy a small amount of tax on
offshore funds.
.
regarding lifetime assurance policies how is the icnome taxed
well - thye do not produce income so wont be taxed, however, if it is in a trust drawdown then yes
if a chargabel event occurs what is it declared as
a chargabele gain
if a policy is subject to a trust who is taxed
teh settlor
what if the settlor dies who pays the taz
the trustee
what is the taxation on a discretionary
45%
