Final Flashcards
What is the max monthly premium for a friendly society?
£25
How often can you pay a premium to a friendly society?
Monthly, annually and other frequencies
Are friendly societies free of income and gains?
Yes
Can each person have a friendly societies policy?
Yes
How many employees must a EIS have?
250 or fewer
What is the gross asset requirement of an EIS
No more than £15m before investment and £16m after
Can an EIS be a listed company?
No
Would an EIS need a permanent UK establishment in order to qualify to be an EIS
Yes
How would one be deemed to have acquired a new domicile status?
By breaking all ties with the UK and putting down roots in another country.
Up to how much tax relief on a registered pension scheme?
45%
How much tax relief into a pension can non taxpayers get?
£3600
From what age can money be accessed? Pension
55
Name 3 non flexible ISAs
Junior
Lifetime
Help to buy
What’s the max annual amount you can put in a lifetime ISA?
£4000
What percentage and max bonus from the gov per year in relation to a lifetime ISA
£1000 or 25% (of £4000 contribution)
When can a lifetime isa be used?
From aged 60 or for a first home
From what age can you get a help to buy ISA?
16 but no longer available
What’s the max annual contribution to a help to buy ISA?
£3000
Name 3 main type of onshore collective investments?
Unit Trust
OIEC
investment trust
Are onshore collective investments subject to CGT
Yes (OEICs, Unit Trusts, investment trusts)
What are onshore collective investments?
Investors cash pooled together
How is income paid from an onshore collective investment
Either via dividend or interest (gross - as with most things)
What percentage of assets in an offshore collective would need to be fixed interest for the income to be regarded as interest?
60%
How is tax on an offshore non reporting fund calculated?
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%)
Will non uk residents investing in an offshore investment bond fund have to pay uk tax?
No
What kind of tax is paid on onshore and offshore life assurance policies?
INCOME not capital gains.
How much can you invest in an EIS and what percentage income tax relief can you get?
£1m (up to 2m where excess of in knowledge intensive)
30% tax relief which can be carried back to previous year.
How long do you have to hold an EIS before it becomes CGT free?
3 years
Can gains be deferred by investing in an EIS?
Yes
How many years do you have to hold an EIS to get business relief for IHT purposes?
2 years
How much can be invested into a SEIS annually? What percentage tax relief can you get?
£100K can be invested with 50% income tax relief
What happens to CGT rolled into an SEIS
50% is written off & the other is due
When is business relief available for IHT in an SEIS?
2 years
How long must an SEIS be held to lock in relief and benefit from gains being free of CGT
3 Years
How much can you invest in a VCT, what if the income tax relief and how long must you hold the investment for?
£200k
30%
5 Years
Can you roll over gains into a VCT?
No
What is the tax position of dividends from a VCT
They are tax free!
What about CGT relief on disposal of VCT?
So although you can’t roll of CGT into a VCT from other investments, disposal of a VCT is CGT free from outset.
Is business relief available on a VCT?
No
Should a VCT be a closed company?
No - meaning shares can be bought freely.
Should a VCT be listed and if so where?
Yes - on an European Economic Area exchange
What must a VCTs income mainly be derived from?
Shares or securities
At least how much of a VCT needs to be invested in qualifying trading companies?
80%
REIT - at lease how much interest on borrowing needs to be covered by rental income?
125%
REIT - How much of gross profits needs to come from letting property?
75%
In relation to a REIT - How much of the rental profits must be paid to investors and in what time period?
90% - within 12 months
Does a REIT need to be closed ended?
Yes - meaning no more shares can be made, only traded
Does a REIT need to be listed on a recognised stock exchange?
Yes
How long is an accelerated payment notice?
90 days
What is the exempt part of a REIT exempt from?
Corporation Tax - it is only exempt to the REIT
The investor will still be liable for income tax
Discretionary Trust - what are the rules for how the trustees decide on the appointment of both capital and income?
The decide on how both capital and income is appointed - basically at they see fit.
Interest in possession - what does the settlor select from the outset?
Default beneficiaries
What do the default beneficiaries of an interest in possession trust get?
The income and ultimately the capital. However, the trustees can swap the default beneficiaries for any of the other beneficiaries from the available classes.
When did interest in possession trusts change from PET to CLT?
2006
What is a close company?
A limited company owned by 5 or less directors
How many employees can a SEIS have?
25
EIS - What is the max they can have raised via other EIS/SEIS/VCT in the last 12 months?
£5m
EIS - max amount raised in companies lifetime?
£12m
EIS - Can subscription be for new shares?
Yes, it can only be for new shares.
Can an SEIS have raised money via EIS or VCT schemes?
No
In a VCT what percentage of its investments must be in qualifying trading companies?
80%
What percentage of ordinary shares must make up a VCT?
70%
VCT assets must not exceed…
£15m before and £16m after investment.
At what rate are gains from property development by a REIT taxed at?
30% unless held for 36 months
What is the asset class that usually underpins special purpose vehicles?
Commercial property
Can SPVs be marketed to novice investors?
No, experienced only
What is income is generated by the non exempt element of a REIT and how is it taxed?
Dividend and as normal
When does the settlor pay CGT when selling or transferring assets in to a trust?
In all cases so bare, Interest in Possession & discretionary
Who is responsible for paying tax on a bare trust? And at what rates?
The beneficiary and at their rates. They can also use their allowances to offset tax liabilities.
What rates of CGT apply to a bare trust?
N/A
What happens if the beneficiary of a bare trust dies?
The value of the trust falls into their estate for IHT purposes
Who is responsible for paying tax on an interest in possession trust? And at what rates?
The trustees at basic rates (8.75% & 20%)
Can tax paid on an interest in possession trust be reclaimed by non taxpayer beneficiaries?
Yes
Will higher/additional rate tax payers have additional liability to tax on a interest in possession trust?
Yes 20% / 25% through their self assessment
How often is the potential periodic charge charged? And how is it calculated? And what trusts does it pertain to?
Discretionary / interest in possession
Every 10 years if trusts are valued in excess of the nil rate band.
Max 6%
What is the exit charge, how much is it and to what trusts does it apply?
A charge on capital being withdrawn from the fund.
Max 6%
Discretionary / interest in possession
Who is responsible for paying tax on a discretionary fund and at what rate?
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
What is a flexible ISA?
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.
Which ISAs are not flexible?
Junior
Help to buy
Lifetime
From when till when can you have a lifetime ISA
18-40
Regarding an investor in a REIT how do they receive income? 2 ways
- property income (comes from the free from corporation tax pot)
- dividend (non tax free pot)
