IMC III Flashcards
Tax Implications of Investment into a Life Company Fund
- 20% corporation tax deducted on income and gains
- Additional income tax will be charged for higher or additional taxpayers - cannot use their CGT allowance. If due 40% tax, then additional 20% will be deducted as Income tax
How much % of the original capital invested into a life company fund can be made on a tax deferred basis?
5%
Tax Benefits for Venture Capital Trusts
- Income tax relief 30% if held for 5 years
- dividend are tax free (no minimum holding period)
- No CGT, cannot use losses against gains
Max investment per year in VCT
200,000
Enterprise Investment Schemes invests in
Unquoted companies with total assets no greater than £15m before the issue of the shares. This limit is called Gross Assets Test
EIS max investment per tax year
£1mn
Minimum investment per tax year EIS
£500
EIS CGT?
- No capital gains tax BUT losses can be offset against income or other gains
SEIS - what + tax benefits?
Targets start-up companies offering 50% income tax relief on up to £100,000 investment per year. Up to 50% of gains are exempt from CGT
What reports must authorized fund managers provide and when?
- Must send a short report to all unitholders half-yearly and
- Prepare a long report yearly that is availabqle on the request of the unit holder
How often does reconciliation of assets not held by the firm have to be preformed?
As often as necessary but at least monthly
How often does firms that physically hold custody assets undertake a physical asset reconciliation?
As often as necessary but at least every six months
Record Keeping MiFID
5 years
Record Keeping life policy or pension scheme
5 years
Record keeping non-MiFID
3 years
Record keeping pension transfers, opt outs
Indefinitely
When do the rules of suitability apply? MiFID vs. non-MiFID
To a firm which makes a personal recommendation in a designated investment or which manages investments
For non-MiFID the rules only apply if:
* The client is a retail client
* The firm is managing the assets of an occupational pension scheme, stakeholder pension scheme or personal pension scheme
What transactions require a suitability report?
Personal recommendations made by a firm to retail clients related to:
* Regulated CIS, an interest in an investment trust savings scheme or an investment trust where the shares are to be held in a PEP or ISA
* Related to personal pension schemes or a stakeholder pension
* election to make income withdrawals or purchase a short-term, annuity
* Entering into a pension transfer or opt-out
* Entering into a life policy transaction
Exceptions for the suitability report requirement
- recommending a regulated CIS where the firm is acting as an investment manager for a retail client
- The client is habitually resident outside the EEA and is not in the UK at the time
What must the suitability report include?
- The client’s demands and needs
- Why the firm believes it’s suitable
- Explain any possible disadvantages for the client
When is the firm required to give a warning to the client in relation to appropriateness?
- Where the firm considers the product or service is not appropriate for the client
- Where the client does not provide information to enable the firm to assess appropriateness, they must warn that they are unable to determine whether the product or services are appropriate for him/her
When does the firm not have to assess appropriateness?
If the service only consist of executions and/or reception and transmission of orders relating to non-complex financial instruments
Non-Complex Financial Instruments are:
- Shares traded on a regulated (or equivalent) market
- Money market instruments, binds or other forms of securitized debt (not including derivatives)
- Units in a UCITS scheme
- Other non-complex financial instruments = not derivatives, no potential liability extending their cost, publicly available information of their characteristics and frequent opportunity to trade them
Who is the Stewardship code applicable to?
Aimed at asset managers and asset owners holding voting rights in UK companies
