Topic 9 Flashcards
Tax Wrappers
The Enterprise Investment Scheme is designed to attract investment in all of the following, except:
a. a company that features in the FTSE 250 index.
b. a scheme that offers tax relief.
c. higher-risk companies.
d. smaller companies.
a. a company that features in the FTSE 250 index.
Jamal is contributing to a Help-to-Buy ISA and is now thinking of starting a Lifetime ISA. He wants to use government bonuses to buy his first home. Which of the following is true?
a) He cannot invest in both types of ISA.
b) He can invest in both types of ISA and use the government bonus from both to buy his first home.
c) He can invest in both types of ISA and use the government bonus from just one of them to buy his first home.
d) He can invest in both types of ISA but cannot claim any government bonus.
c) He can invest in both types of ISA and use the government bonus from just one of them to buy his first home.
Aisling, aged 32, has a Lifetime ISA fund worth £3,600, having invested £3,000. She is now in some financial difficulties and needs to withdraw the funds. How much would Aisling receive if she did cash in the fund?
a) £2,250.
b) £2,700.
c) £3,000.
d) £3,600.
b) £2,700.
There is a 25% penalty applied if funds are withdrawn for reasons other than the purchase of a first home, the holder reaching age 60 or the holder suffering a terminal illness.
When Adrian died, he had £140,000 invested in a stocks and shares ISA. What is the position with the ISA?
a) Adrian’s executor can make a further investment in the ISA on Adrian’s behalf to top up the current year’s subscription.
b) Adrian’s spouse or civil partner can make an additional subscription of up to £140,000.
c) The ISA trustees have discretion about how to distribute the fund.
d) Adrian’s ISA must cease and the proceeds become part of his estate.
b) Adrian’s spouse or civil partner can make an additional subscription of up to £140,000.
At what minimum age can funds be taken from a Child Trust Fund?
a) At any age.
b) 16.
c) 18.
d) 21.
c) 18.
Which of the following cannot be held in a stocks and shares ISA?
a) UK open ended investment companies.
b) Gilts.
c) Residential property.
d)UK investment trusts.
c) Residential property.
Sashin wishes to invest into a venture capital trust (VCT). Which one of the following statements is false?
a) VCT gains are exempt from capital gains tax.
b) The maximum investment for tax relief is £500,000.
c) VCT dividends are tax free.
d) Income tax relief is available at 30%.
b) The maximum investment for tax relief is £500,000.
With an Enterprise Investment Scheme (EIS), which of the following are true?
a) Tax relief is available on up to £1m investment per tax year.
b) Investment is made through a collective investment scheme.
c) Gains are exempt from capital gains tax if shares are held for five years.
d) Tax relief is available at the investor’s marginal rate.
a) Tax relief is available on up to £1m investment per tax year.
Which of the following is untrue regarding ISAs?
a) It is not possible to have a joint ISA.
b) Shares from an all‑employee savings‑related share option scheme can be held in an ISA.
c) The minimum age for a cash ISA is 18.
d) Subject to the annual contribution limit, it is possible to invest in different ISAs in the same year.
c) The minimum age for a cash ISA is 18.
Janine is 35 and has a Help-to-Buy ISA. She is now about to buy her first property. In total she has been informed that her ISA will provide £3,600 towards the purchase. This means her current fund, without including the government bonus, is worth:
a) £2,400.
b) £2,880.
c) £3,000.
d) £4,000, because she will not qualify for a bonus due to her age.
b) £2,880.
The government bonus is 25% of the fund.
Mansour has a flexible cash ISA, having invested £15,000 of the £20,000 annual limit in July. The following December he withdrew £8,000 in an emergency to replace his car. How much, if anything, could Mansour invest in the ISA before the end of the tax year?
a) He cannot make a further investment in the tax year.
b) £5,000.
c) £8,000.
d) £13,000.
d) £13,000.
Mansour can invest £20,000 in the tax year. A flexible ISA allows him to withdraw cash and replace it until the end of the tax year. He had £5,000 of his annual allowance left anyway, and could also replace the £8,000, giving a total of £13,000.
