Unit 6 - Personal investment

Question 1

Pension tax relief

Answer 1

Conts not taxed
No tax on income/cap gains
PCLS
Life assurance can be provided from funds paid into account

Question 2

ISAs

Answer 2

Introduced in April 1999
No income/cap gains tax on investments
Withdrawals at any time
Can put £20k p.a. in

Question 3

What stocks/shares are available to ISA?

Answer 3

• Ordinary shares
• Preference shares/convertible preference shares
• Corporate bonds and convertible bonds with over 5 years to run
• Collective investment schemes
• Shares/loan stock from industry
• Gilts/gilt strips
• EEA securities

Question 4

What is an innovative finance ISA?

Answer 4

Allows unlisted shares and P2P lending

Question 5

LISA

Answer 5

April 2017
18-40, first home or retirement
- Max cont of £4k
- 25% bonus on each cont up to age 50
- Used on deposit for first home (up to £450k) or retirement, from 60
- Early withdrawal - loss of bonus, 5% charge

Question 6

Tax allowances on investments outside tax-wrapper

Answer 6

Savings interest - £1000 (£500 for high earners)

Dividend income - £2000

Question 7

National savings (NS&I)

Answer 7

Products offered by govt to help meet public sector net cash requirement PSNCR e.g. premium bonds

Question 8

Life saving contracts

Answer 8

e.g. endowment assurance
Taxed within life company as Basic Life Assurance and General Annuity Business (BLAGAB) policies under I minus E regime, so benefits paid have already been taxed

Question 9

I minus E regime

Answer 9

Tax on investment income less management expenses

Question 10

Chargeable events regime

Answer 10

Excess of policy benefits over premiums paid taxed as income rather than CGT

Question 11

What tax credit is given to non-qualifying life contracts?

Answer 11

20%

Question 12

Tax charge on policy benefits

Answer 12

May apply at maturity/death or on surrender

Question 13

Auto enrolment dates

Answer 13

2012-2018

Question 14

AE - fund charge caps

Answer 14

0.75%