Direct Investments Flashcards
What do we mean by direct investments?
Cash, fixed interest, properties or shares either through a wrapper i.e ISA or actually buying the investment directly
Cash deposit and fixed interest - saving deposits with bank and building societies
National savings and investment - giv backs and form of gov borrowing used to raise finance for gov spending examples-
Ns&I direct Isa - min subscription of £1 - interest variable and tax free
Ns&I certificates - both fixed interest and index linked - tax free
Ns&I guaranteed growth bond - paid gross but taxable
Ns&I income bonds - paid gross but taxable ..
Ns&I bank accounts…
Fixed interest securities
Effectively loans where lend money and get a return- gilts are loans to governments, corporate bonds are loans to companies
Generally the above are all cgt free - corp bonds need to be qualifying
Fixed interest generally pay coupons every 6 months
Income from this is taxable as saved income
Note on PIBs - perminant interest bearing shares:
High yielding fixed interest investments issued by building societies but listed on the stick market
They pay fixed rate of interest but no requirement to pay, interest paid twice year and is taxable. Any gain on PIBs is exempt from CGT. PIBs are no longer issues as they don’t met regulatory requirement.
Shares - as expected
Property - income received is investment income not earned income - repairs and maintenance are allowed as deduction for CGT but not improvements
SDLT has 3% surcharge for buy to let’s also plus 8% surcharge for CGT
Furnished holiday lets-
Income from this is treated as relevant income for pension purposes, allowing pension contributions to be made in respect of it
8% surcharge will apply but benefit from rollover, holdover and business asset disposal relief
To qualify -
Be in UK or eea
Must be furnished
Let on commercial basis
Available to let for 210 days
Actually let out for 105 days
Let’s can be for more than 30 days as long as not 155 days
Letting out part of your home-
7500 relief on income tax
3750each
From cgt pov - lose relief for part let out - reduced by lowest of 40k or amount capital gain is exempt because main part of house
