Chapter 9 - Investment Wrappers, Taxation And Trusts Flashcards
What are investment wrapper and give examples/requirements?
They give tax advantages to look attractive to savers.1) NISA (stocks and shares for 18+ or cash only 16+)2) JISA (for UK resident children who do not have a CTF, both cash and stocks accounts are available, £4k per year, opened and managed by parents, it is not possible to transfer CTFs to JISAs)3) Pensions (state pension, occupational pensions, private pensions, stakeholder pensions)4) investment bonds (single premium life assurance policy that is taken out for the purpose of investment)5) CTFs (child trust fund)
What are the main sources of tax?
1) Income tax(i) non-savings - salary and pension income(ii) savings - interest on bank accounts and bonds (paid with 20% tax deducted as bonds are paid before the company pays tax)(iii) dividend - (paid with a 10% tax credit as profits come after tax is paid)2) capital gains tax (exempt: main home, personal possessions up to £6k, gilts and qualifying corporate bonds, NISA, JISA, betting, transfer between spouses)3) inheritance tax (estate, trusts or gifts during lifetime after £325k)4) stamp duty (on any purchase of stocks, none on foreign shares, bonds, OEICs ( and unit trusts - already paid when shares are bought), ETFs or unit trusts)5) VAT
