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R03 - Final > Final > Flashcards

Final Flashcards

1
Q

What is the max monthly premium for a friendly society?

A

£25

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2
Q

How often can you pay a premium to a friendly society?

A

Monthly, annually and other frequencies

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3
Q

Are friendly societies free of income and gains?

A

Yes

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4
Q

Can each person have a friendly societies policy?

A

Yes

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5
Q

How many employees must a EIS have?

A

250 or fewer

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6
Q

What is the gross asset requirement of an EIS

A

No more than £15m before investment and £16m after

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7
Q

Can an EIS be a listed company?

A

No

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8
Q

Would an EIS need a permanent UK establishment in order to qualify to be an EIS

A

Yes

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9
Q

How would one be deemed to have acquired a new domicile status?

A

By breaking all ties with the UK and putting down roots in another country.

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10
Q

Up to how much tax relief on a registered pension scheme?

A

45%

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11
Q

How much tax relief into a pension can non taxpayers get?

A

£3600

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12
Q

From what age can money be accessed? Pension

A

55

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13
Q

Name 3 non flexible ISAs

A

Junior
Lifetime
Help to buy

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14
Q

What’s the max annual amount you can put in a lifetime ISA?

A

£4000

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15
Q

What percentage and max bonus from the gov per year in relation to a lifetime ISA

A

£1000 or 25% (of £4000 contribution)

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16
Q

When can a lifetime isa be used?

A

From aged 60 or for a first home

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17
Q

From what age can you get a help to buy ISA?

A

16 but no longer available

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18
Q

What’s the max annual contribution to a help to buy ISA?

A

£3000

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19
Q

Name 3 main type of onshore collective investments?

A

Unit Trust
OIEC
investment trust

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20
Q

Are onshore collective investments subject to CGT

A

Yes (OEICs, Unit Trusts, investment trusts)

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21
Q

What are onshore collective investments?

A

Investors cash pooled together

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22
Q

How is income paid from an onshore collective investment

A

Either via dividend or interest (gross - as with most things)

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23
Q

What percentage of assets in an offshore collective would need to be fixed interest for the income to be regarded as interest?

A

60%

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24
Q

How is tax on an offshore non reporting fund calculated?

A

Due to benefiting from gross roll up - the gain is calculated like CGT (sold price - acquisition) then taxed at income tax rates (20%,40%,45%)

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25
Q

Will non uk residents investing in an offshore investment bond fund have to pay uk tax?

A

No

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26
Q

What kind of tax is paid on onshore and offshore life assurance policies?

A

INCOME not capital gains.

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27
Q

How much can you invest in an EIS and what percentage income tax relief can you get?

A

£1m (up to 2m where excess of in knowledge intensive)

30% tax relief which can be carried back to previous year.

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28
Q

How long do you have to hold an EIS before it becomes CGT free?

A

3 years

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29
Q

Can gains be deferred by investing in an EIS?

A

Yes

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30
Q

How many years do you have to hold an EIS to get business relief for IHT purposes?

A

2 years

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31
Q

How much can be invested into a SEIS annually? What percentage tax relief can you get?

A

£100K can be invested with 50% income tax relief

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32
Q

What happens to CGT rolled into an SEIS

A

50% is written off & the other is due

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33
Q

When is business relief available for IHT in an SEIS?

A

2 years

34
Q

How long must an SEIS be held to lock in relief and benefit from gains being free of CGT

A

3 Years

35
Q

How much can you invest in a VCT, what if the income tax relief and how long must you hold the investment for?

A

£200k
30%
5 Years

36
Q

Can you roll over gains into a VCT?

A

No

37
Q

What is the tax position of dividends from a VCT

A

They are tax free!

38
Q

What about CGT relief on disposal of VCT?

A

So although you can’t roll of CGT into a VCT from other investments, disposal of a VCT is CGT free from outset.

39
Q

Is business relief available on a VCT?

A

No

40
Q

Should a VCT be a closed company?

A

No - meaning shares can be bought freely.

41
Q

Should a VCT be listed and if so where?

A

Yes - on an European Economic Area exchange

42
Q

What must a VCTs income mainly be derived from?

A

Shares or securities

43
Q

At least how much of a VCT needs to be invested in qualifying trading companies?

A

80%

44
Q

REIT - at lease how much interest on borrowing needs to be covered by rental income?

A

125%

45
Q

REIT - How much of gross profits needs to come from letting property?

A

75%

46
Q

In relation to a REIT - How much of the rental profits must be paid to investors and in what time period?

A

90% - within 12 months

47
Q

Does a REIT need to be closed ended?

A

Yes - meaning no more shares can be made, only traded

48
Q

Does a REIT need to be listed on a recognised stock exchange?

A

Yes

49
Q

How long is an accelerated payment notice?

A

90 days

50
Q

What is the exempt part of a REIT exempt from?

A

Corporation Tax - it is only exempt to the REIT

The investor will still be liable for income tax

51
Q

Discretionary Trust - what are the rules for how the trustees decide on the appointment of both capital and income?

A

The decide on how both capital and income is appointed - basically at they see fit.

52
Q

Interest in possession - what does the settlor select from the outset?

A

Default beneficiaries

53
Q

What do the default beneficiaries of an interest in possession trust get?

A

The income and ultimately the capital. However, the trustees can swap the default beneficiaries for any of the other beneficiaries from the available classes.

54
Q

When did interest in possession trusts change from PET to CLT?

A

2006

55
Q

What is a close company?

A

A limited company owned by 5 or less directors

56
Q

How many employees can a SEIS have?

A

25

57
Q

EIS - What is the max they can have raised via other EIS/SEIS/VCT in the last 12 months?

A

£5m

58
Q

EIS - max amount raised in companies lifetime?

A

£12m

59
Q

EIS - Can subscription be for new shares?

A

Yes, it can only be for new shares.

60
Q

Can an SEIS have raised money via EIS or VCT schemes?

A

No

61
Q

In a VCT what percentage of its investments must be in qualifying trading companies?

A

80%

62
Q

What percentage of ordinary shares must make up a VCT?

A

70%

63
Q

VCT assets must not exceed…

A

£15m before and £16m after investment.

64
Q

At what rate are gains from property development by a REIT taxed at?

A

30% unless held for 36 months

65
Q

What is the asset class that usually underpins special purpose vehicles?

A

Commercial property

66
Q

Can SPVs be marketed to novice investors?

A

No, experienced only

67
Q

What is income is generated by the non exempt element of a REIT and how is it taxed?

A

Dividend and as normal

68
Q

When does the settlor pay CGT when selling or transferring assets in to a trust?

A

In all cases so bare, Interest in Possession & discretionary

69
Q

Who is responsible for paying tax on a bare trust? And at what rates?

A

The beneficiary and at their rates. They can also use their allowances to offset tax liabilities.

70
Q

What rates of CGT apply to a bare trust?

A

N/A

71
Q

What happens if the beneficiary of a bare trust dies?

A

The value of the trust falls into their estate for IHT purposes

72
Q

Who is responsible for paying tax on an interest in possession trust? And at what rates?

A

The trustees at basic rates (8.75% & 20%)

73
Q

Can tax paid on an interest in possession trust be reclaimed by non taxpayer beneficiaries?

A

Yes

74
Q

Will higher/additional rate tax payers have additional liability to tax on a interest in possession trust?

A

Yes 20% / 25% through their self assessment

75
Q

How often is the potential periodic charge charged? And how is it calculated? And what trusts does it pertain to?

A

Discretionary / interest in possession

Every 10 years if trusts are valued in excess of the nil rate band.

Max 6%

76
Q

What is the exit charge, how much is it and to what trusts does it apply?

A

A charge on capital being withdrawn from the fund.
Max 6%
Discretionary / interest in possession

77
Q

Who is responsible for paying tax on a discretionary fund and at what rate?

A

The trustees - after the first £1000 paid at basic - the rest is at additional rate (39.35% or 45%)

No allowances can be claimed by trustees

Non, basic & higher rate taxpayers can reclaim additional rates via self assessment

78
Q

What is a flexible ISA?

A

It’s an ISA the saver can withdraw some of their money from and then replace it again without it counting towards their ISA limit.

79
Q

Which ISAs are not flexible?

A

Junior
Help to buy
Lifetime

80
Q

From when till when can you have a lifetime ISA

A

18-40

81
Q

Regarding an investor in a REIT how do they receive income? 2 ways

A
  • property income (comes from the free from corporation tax pot)
  • dividend (non tax free pot)

R03 - Final (1 decks)

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