Topic 9: Tax Wrappers Flashcards
Stella, aged 24, has invested £4,000 into a Lifetime ISA (LISA) in 2020/21. How much, if anything, can she invest into other ISAs in the current tax year?
£16,000. She has the remainder of her annual subscription limit available
In what circumstances is an additional permitted subscription (APS), over and above the usual investment limit, allowed in respect of an ISA?
An APS is allowed for someone who has died: the spouse/civil partner of the deceased is able to make an additional ISA contribution to the value of the ISA holdings of the deceased.
Following someone’s death the right to make an additional permitted subscription (APS) lasts for a period of up to:
a) 6 months.
b) 12 months.
c) 2 years.
d) 3 years
d) The right to make a cash APS lasts for three years from date of death, or 180 days from grant of administration, whichever is later. For stocks and shares, the time limit is simply 180 days after administration of the estate is complete.
In May 2020, Jane invested £10,000 into a stocks and shares ISA that does not offer a flexible investment facility. In July 2019, she withdrew £1,760. Given an annual ISA investment limit of £20,000, how much would Jane be able to pay into ISAs during the remainder of 2019/20?
a) £10,000.
b) £12,240.
c) Nil.
d) £20,000
a) The withdrawn amount counts towards Jane’s ISA allowance so she could invest a further £10,000 (£20,000 less the £10,000 initially invested)
The advantage of holding investments in a stocks and shares ISA, rather than holding collective investments directly, is that the investment is free of what taxes?
Investments held within an ISA are free from income tax and capital gains tax.
Existing Help‑to‑Buy ISA customers can continue saving up to £200 per month until:
a) 30 November 2021
b) 30 November 2024
c) 30 November 2026
d) 30 November 2029
d) Customers who owned Help‑to‑Buy ISAs before 30 November 2019, can save a maximum of £200 per month until 30 November 2029
What is the purpose of the Lifetime ISA
The Lifetime ISA aims to encourage people to save for the purchase of their first home and/or for their retirement.
An investor can increase their annual ISA investment limit by taking out a Lifetime ISA, a Help‑to‑Buy ISA and a standard ISA. True or false?
False. The annual investment limits for Lifetime and Help‑to‑Buy ISAs count towards the overall annual ISA investment limit; they are not in addition to it.
Aaron, aged 12, has a stakeholder Child Trust Fund. What is the maximum annual management charge that can be applied to the fund?
a) 0.75 per cent.
b) 0.5 per cent.
c) 1 per cent.
d) 1.5 per cent.
d) The maximum annual management charge that can be applied to a stakeholder CTF is 1.5 per cent
Which type of investment normally represents a higher risk: an investment trust or a venture capital trust?
A Venture Capital Trust would normally represent a higher risk to the investor than an investment trust because VCTs invest in newly established companies, which tend to be higher risk
