Topic 9 Tax Wrappers Flashcards
What is a tax wrapper?
Is a tax shelter that changes how an investment is taxed
What are the 2 ways tax is charged on an investment?
- When funds are invested
- When funds are paid out
What is a Individual Savings Account (ISA)?
Introduced in 1999 to develop a savings habit in the population
What are the main types of ISA’s
- Cash ISA
- Stocks and Shares ISA
- Initiate Finance ISA
- Lifetime ISA
What type of ISA covers these:
- Shares & Corporate Bonds issued by companies anywhere is the world
- Gilts & Stocks issued by governments in the EEA
- Unit Trusts, OEIC & Investment Trusts
- Life assurance policies on life of sole ISA investor
- Units in stakeholder medium term investment product
Stocks and Shares ISA’s
What is the maximum number of days shares in an all-employee savings-related share option scheme (SAYE) need to be to qualify as a Stocks & Shares ISA
90 days
What type of ISA covers these:
- Savings in bank or building deposit account
- (Money Making Instruments) units in Unit Trust & OEIC
- Stakeholder cash deposit products
Cash ISA
What type of ISA covers these:
- Peer to Peer Investing
- Long term Asset Funds
Innovative Finance ISA
What type of ISA covers these:
- Used to buy first home
- Save for retirement life
Lifetime ISA
A Help to Buy ISA has been replaced by a Lifetime ISA.
True or False?
True
What is the earliest age a person can buy either a Stocks & Shares , Lifetime or Innovative Finance ISA?
18
What is the earliest age a person can buy a Cash ISA?
16
An ISA can be held in joint names.
True or False?
False it can only be held in sole name
A person must be resident in the UK to qualify for an ISA?
True or False?
True
What are subscription Limits ISA’s?
The maximum that can be saved each tax year
What is the maximum subscription limit for an ISA’S?
£20,000 per tax year across all ISA’s (not in each)
What is the maximum subscription limit for a lifetime ISA?
£4,000 per year
What is an Additional Permitted Subscription (APS)?
Allows a person to make an extra payment into a deceased persons ISA
Is this statement correct?
Additional Permitted Subscription (APS) allows a payment into the value of the deceased ISA’s holdings
Yes this is correct
The right to make an Additional Permitted Subscription (APS) is valid until the earlier of what?
- 180 days after admin of the estate
- Closure of the account
- 3rd anniversary of the deceased ISA holder death
Why is APS different for Stocks & Shares ISA’S?
The limit is only 180 days after the admin of the estate
ISA funds can be transferred between different types of ISA’S without contravening ISA limits.
True or False
True
Do ISA providers have to provide a facility for investors to replenish funds withdrawn from an ISA?
No they don’t have to but can if they wish
What type of tax are ISA holders exempt from?
Income Tax & Capital Gains Tax
What is a Help to Buy ISA?
Was a ISA open to people looking to buy their first home between December 2015 & November 2019
When must a Help to Buy ISA be used to purchase a house?
1st December 2030
What is the maximum per month that can be paid into a Help to Buy ISA?
£200
What is the minimum & maximum bonus size of a Help to Buy ISA?
Minimum £400
Maximum £3,000
What is the maximum property value the Help to Buy ISA is available to in London?
£450,000
What is the maximum property value the Help to Buy ISA is available to elsewhere in the UK?
£250,000
When is the bonus paid on a Help to Buy ISA?
When the home purchase is completed
Are Help to Buy ISA savings payments part of an investors ISA allowance or in addition to it?
They are part of it not an addition
What is the purpose of a Lifetime ISA?
To encourage younger people to save for their first home or for retirement
What is the maximum home value for a Lifetime ISA?
£450,000
From what ages can a Lifetime ISA be opened?
18-40
What percentage do the government pay on a bonuses before the age of 50 on Lifetime ISA’s?
25%
When is the bonus paid on a Lifetime ISA?
Monthly
What is the earliest age a person can use a lifetime ISA for retirement purposes?
60
What happens if a Lifetime ISA holder is terminally ill?
They can withdraw the savings and the bonus
What percentage of penalty does a Lifetime ISA holder receive if they use savings for anything other than a house purchase or savings?
25%
Is this statement true?
A bonus from a Help to Buy ISA & a Lifetime ISA can be used to towards a house purchase
False a bonus is only useable from one of products
What did a Junior ISA replace in November 2011?
Child Trust Fund
True or False
A child can have both a Junior ISA & Child Trust Fund
False they can only have one or the other
At what age can a child manage their own Junior ISA?
16
What age can the funds be accessed on a Junior ISA?
18
What is the annual limit of a Child Trust Fund?
£9,000
What are the 3 types of Child Trust Fund?
- Deposit savings accounts
- Share accounts
- Stakeholder CTF
What is the maximum annual charge allowed on a Stakeholder Child Trust Fund?
1.5%
What is a Venture Capital Trust (VCT)?
Is a company who’s shares are listed on the Stock Exchange
What does a Venture Capital Trust (VCT) invest in?
Various companies on the stock exchange
What are the tax benefits of Venture Capital Trusts
- Income tax relief up to 30% of on investment up to £200K per year
- Dividends from VCT from £200K are tax free
- Capital gains are tax exempt from CGT
What is a Enterprise Investment Scheme?
Is a scheme that allows tax relief on direct investment in companies
What are the tax benefits of Enterprise Investment Schemes?
- 30% tax relief on investments up to 1 million
- Reinvested gains are exempt from CGT
- CG from EIS scheme are exempt from CGT provide they are held for 3 years
What is the maximum amount an investment in a Knowledge investment company can receive 30% tax relief on?
2 Million
What is the Seed Enterprise Investment Scheme (SEIS)
A scheme that offers even higher tax relief to small start up companies
When is the latest date a person can pay in to a Help to Buy ISA?
30th November 2029
Can a Child Trust Fund be transferred to a Junior ISA?
Yes they can be on request
Is there a monthly savings limit on a Lifetime ISA?
No but savings are only allowed up to the maximum savings limit of £4,000
What percentage withdrawal fee will be charged if somebody transfers out of a lifetime ISA to a different ISA before age 60
25%
How much was the government bonus on a Help to Buy ISA?
25% on the amount saved + interest provided balance of £1,600 was saved in the account
Enterprise Investment Schemes (EIS) are investments in companies that have what features?
- Investment in smaller high risk companies
- Offers tax relief
