U1: T9 - TAX WRAPPERS Flashcards
Stella, aged 24, has invested £4,000 per year into a cash ISA for the past 3 years. In the current tax year, she received an inheritance and invested the full subscription limit into her cash ISA, but now she would like to split the money between her cash ISA and a stocks and shares ISA.
Is she able to do this in the current tax year?
Yes, she can transfer money between different ISAs without contravening the maximum subscription limit.
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 a cash additional permitted subscription (APS) lasts for the later of 180 days or what length of time from the date of death?
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 the current tax year, Jane invested £10,000 into a stocks and shares ISA that does not offer a flexible investment facility. Later in the current tax year, 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 the current tax year?
a) £10,000.
b) £12,240.
c) Nil.
d) £20,000.
A)
The withdrawn amount counts towards Jane’s ISA allowance because her provider does not offer a flexible investment facility, so she could invest a further £10,000 (£20,000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 ISA 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.
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 Child Trust Fund. His mother wants to open a Junior ISA for him instead, but she is unable to transfer the Child Trust Fund into a Junior ISA and Aaron cannot hold both types of account.
True or false?
False.
Aaron’s mother can transfer the Child Trust Fund into a Junior ISA. However, it is true that Aaron cannot hold both types of account concurrently.
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.
What is the minimum age for investing in a:
1) innovative finance ISA
2) Lifetime ISA
3) Stocks and shares ISA
18 years (Lifetime ISAs also have a maximum age of 40)
What is the minimum age for investing in a cash ISA?
16 years old
An ISA investor must be a UK resident. True or false
True
Upon death, when would an ISA holding cease to be a “continuing account of a deceased investor” when:
1) the administration of the estate is in 5 years
2) the account is closed in 4 years
3) 3 years passes since the death anniversary
3) 3 years passes since the death anniversary
On death, ISA holdings are designated as a “continuing account of a deceased investor” and remain so until the earlier of the:
- administration of the estate;
- closure of the account; or
- third anniversary of death.
What allowance grants the surviving spouse/civil partner to make an additional ISA subscription to the value of the deceased’s ISA holdings?
APS
An ‘additional permitted subscription’ (APS) allowance applies when an individual’s spouse or civil partner dies. The purpose of the APS is to protect the tax benefits around savings held within an ISA. It allows the surviving spouse/civil partner to make an additional ISA subscription to the value of the deceased’s ISA holdings.
