Up Keep Flashcards

Question

Can you use carry forward for money purchase annual allowance?

Answer 1

When flexibly accessing pension so essentially when taking an income from pension past 25% tax free lump sum: - Capped drawdown - UFPLS - take a mix of tax free cash and income - Take an income from flexi access drawdown - Flexible drawdown - take an income they choose as and when - Flexible annuity - Occupational pension scheme taken

Answer 2

Reach SPA before 6th April 2016 Reach SPA from 6th April 2016

Answer 3

Can be made upto tax yr before SPA and restricted to last 6yrs records

Answer 4

Not currently but will be from April 2027

Answer 5

Salary only Company make pension contributions directly as part of remuneration package and then limited to £60k annual allowance of tax free contributions Saves: - directors pension increases - saving on corporation tax for company - saving on NI contributions

Answer 6

Yes, may be extra fees if use an abroad bank account Yes, but all means tested pension credit will stop and increases to SP may stop depending on the country

Answer 7

Contributions limited to £3,600 tax free To receive tax relief must have been resident in 1 of last 5 yrs and be a member of a UK registered pension scheme

Answer 8

Taxable at marginal rate Self assessment or if meet the requirements then can pay from the pension pot

Answer 9

Pension member must tell scheme within 91 days

Answer 10

Take tax free cash alone Taking DB income Small pots rule/DB triviality payments Death benefits

Answer 11

Must earn the amount you are contributing to pension personally (unless employer is making this contribution E.g. if looking to contribute £100k within a tax yr then must earns atleast £100k

Answer 12

£1,073,000 (Excludes state pension & inherited pensions)

Answer 13

Subject to tax charge Lump sum - 55% Designated as income - 25% but also both subject to tax at marginal rate when funds taken

Answer 14

Benefit crystallisation event - Uncrystalised pensions tested against LTA and any excess suffers from 25% charge Second test on drawdown funds on amount of funds that went into drawdown (not including tax free cash payment) - value at age 75 = amount tested against LTA

Answer 15

Pension rights of over £1.5mil on 5th April 2006. Amount over can then use as % to increase current LTA by. Underpin of 1.8mil. Can continue to contribute to pension

Answer 16

No min. value No further contributions allowed to keep this protection No LTA tax charge to make ever Keep % of PCLS if over 25%

Answer 17

Keep LTA at the time of either £1.8m, £1.5m, 1.25m dependent upon the protection No further contributions allowed to keep this

Answer 18

Keep LTA at the time of between £1.25m to £1m dependent upon the protection Further contributions allowed to keep this

Answer 19

Value of tax free cash on April 2006 is more than 25% then keep this as tax free cash protection Lost if transfer funds to another scheme

Answer 20

- purchased life annuity - paid from lump sum til death and pays capital and interest element - taxed only on interest received and can use PSA to reduce tax liability - purchased annuities certain - paid for a set term regardless of death - same tax as PLA (above) - pension annuity - paid as a result of a pension scheme - taxable in full as earned income - deferred annuity - capital is handed over but annuity does not begin for set period - same tax as PLA (above) - annuities for beneficiaries - paid as per trust or will - taxable in full as savings income - immediate needs annuity - often used to fund care home fees and pay larger annuity payments as shorter life expectancy - if paid directly to care home then no tax liability

Answer 21

GP - a guarantee the annuity will pay for a period of time even in the event of death will be paid to beneficiaries but if live past this GP then this will continue to be paid til death Widows, dependent or survivors pension - pay a percentage of original income until beneficiaries death AP - beneficiaries receive a lump sum of original annuity cost - income received. So if annuity is £250k - £50k income then beneficiaries would receive £200k WP - income is based on anticipated bonus rates and income will reduce or increase in line with this. Usually has a cap and collar UL - income based on fund performance. Usually has a cap and collar.

Answer 22

Guaranteed income for a set term. Purchaser will then receive a guaranteed amount at the end of the term aka maturity value.

Answer 23

Yes Personal contribution automatically topped up 20% by gov. Then if higher or additional rate tax payer, than do self assessment to reclaim additional 20% or 25% also.

Answer 24

Any contributions made are taken off the £40k e.g. if personal contributions of £10k then have £30k carry forward for that year

Answer 25

Wife gets £322k, all chattels and half of remaining amount above this, remaining half goes to children

Answer 26

Kids get whole estate

Answer 27

Goes in order of: 1. Parents 2. Brothers/Sisters 3. Uncles/Aunties

Answer 28

Estate goes to the crown

Answer 29

Treated the same as children if the grandchild out lives their parent (child of deceased)

Answer 30

Those assets then have usual intestacy rules applied e.g. spouse £322k…

Answer 31

DFM - Act within a remit for client so do not ask for permission per transaction AFM - Cannot make a transaction without clients permission

Answer 32

Effectively finances are frozen until under go a very lengthy process and a court give power for someone to look after your finances. This may not be who you would have chosen. Legal fees to this process and more expensive than POA. Almost like an insurance product on yourself and must do before lose capacity or it’s too late.

Answer 33

When accessing pension above tax free amount i.e 25% tax free amount. Or taking an income

Answer 34

Tax free lump sum taken only Not taxed - No

Answer 35

Taking 25% tax free lump sum amount and income from remaining 75% Remaining 75% taxable as income Yes

Answer 36

Take an income from pension (as much or as little needed) All income taxable as income Yes, any income received will trigger this

Answer 37

Guaranteed income paid from an insurance company Taxable as income Standard annuities (e.g. level or increasing) will not but can if the annuity is flexible meaning have the option to reduce or increase income amount received

Answer 38

Personal pension: 3x pots each valued at £10k or less Occupational pension: Unlimited amount of pots valued at £10k or less Taxable as income No

Answer 39

Subject to IHT & If die from age 75 subject to income tax also

Answer 40

Yes, always taxable as income

Answer 41

Depends on the pension scheme but SJP retirement account have option of lump sum, annuity, FAD, mix and match

Answer 42

If beneficiary does not want the money and another beneficiary is assigned they can only take this as a lump sum and this will be tested against LSA so could be taxable for them

Answer 43

If it was then it would be subject to IHT

Answer 44

Taxable in hands of recipient

Answer 45

Subject to IHT But Not subject to income tax upto lump sum death benefit allowance of £1,073,100

Answer 46

Yes Taxable on recipients income tax at marginal rate

Answer 47

LSA - £268,275 - Tax free amount allowed during lifetime LSDBA - £1,073,100 - Tax free amount allowed on death

Answer 48

EPOA - Can deal with finances but not personal welfare. Can deal with this immediately if donor chooses attorney to do so. (Can no longer arrange) LPOA - Can deal with both finances and personal welfare. But if donor chooses then attorney can deal with finances whether mentally capable or not and only deal with personal welfare once mentally incapable

Answer 49

Pre-funded - Arranged when in good health for if needed - No longer sold Immediate care plans (aka immediate needs annuity) - Lump sum made to insurer payment in exchange for income that covers shortfall in current income and care costs. Paid directly to home.

Answer 50

Release equity and lender doesn’t expect return of funds until die, go into permenant care or move home

Answer 51

Protection covering debts on the death of a key person. Key for directors loans also as if director dies their estate will then ask to recall loan. - benefits not taxable but premiums not tax deductible

Answer 52

Loan from director to the business over a set term

Answer 53

Cover death or illness of key people (e.g. board, directors, specialists) who losing would have financial impact Can be set-up as life cover, IP or CIC Can arrange as multiple of profit, salary or loss to business - Tax relief - Will either receive tax relief on premiums paid or sum assured. Will definitely meet tax relief on one of two but depends on which of the 2 complex rules are met

Answer 54

Ensuring shareholder A can afford to purchase shares from person who inherits shares on death of shareholder B. So shareholder A would receive payment directly from life company. Can calculate by multiple of profits, business valuation, net asset value, etc. - if company pays premiums are tax deductible but shareholder will pay income tax and NI but if shareholder pays then not tax deductible. Benefits not taxable

Answer 55

Single person DIS policy but more tax efficient - allowable expense so save corporation tax, employees income tax and NI contrib. - trust can be used - no lifetime allowance charge

Answer 56

Pension contributions are deducted from company profits which corporation tax is based on

Answer 57

Gives property to another person without full immediate rights to property. - No, can have beneficiaries only so person is then settlor and trustee - practically any asset

Answer 58

Critical Yield is the estimated investment return, after charges, that must be achieved in order to receive retirement benefits at least as good as those offered by another scheme

Answer 59

the pension scheme provider will decide who will receive any lump sum and survivor pension. This is usually decided after the next of kin has completed a claim form providing details of the deceased's family and any dependents they had.

Answer 60

Withdraw the entire pension as a lump sum OR Continue with flexi-access drawdown Taxable at beneficiaries marginal rate when holder dies over age 75

Answer 61

If you'd like to retire early, under certain circumstances, it is possible to withdraw your private pension before the age of 55. However, this can end up being costly. It isn't against the law to withdraw from your pot before your retirement age but you may pay up to 55% tax on your withdrawals.

Answer 62

Can transfer fixed amount of £1,260 personal allowance to spouse or civil partner Rules: - neither can be above basic rate band - amount transferable is fixed at £252 tax saving -cannot take with married couples allowance - can be back dates upto 4yrs and once taken will auto continue in future

Answer 63

Unit Trust

Answer 64

Tax on gain only. But can cash in investments funds with little to no gain only if possible to cause no CGT liability. Can also cause scewed ATR if you do this

Answer 65

Spend money (40% discount) Trusts Gifts WOL policy (especially if property heavy) Put into pension

Answer 66

If client dies, pension will go into trust rather than beneficiaries bank account. Avoids IHT liability if beneficiary then dies and have same access to account. Can also choose several beneficiaries, whilst also choosing to appoint someone who has full control over trustees

Answer 67

The most common scenario is a married couple owning the family home as ‘joint tenants’. When the first spouse dies, the jointly owned property passes automatically to the other spouse. There would be no Inheritance Tax to pay on the family home because of the ‘spouse exemption’ (this means gifts to spouses are exempt from Inheritance Tax). However, this often means their nil rate band is not used. A house in London is particularly prone to being over the Inheritance Tax threshold. When the second spouse dies, they would often leave the family home to their children. But they then only have one nil rate band to use. From a tax perspective all is not lost, as in this situation the nil rate band from the first spouse can also be used.

Answer 68

No, married partner ISA allowance increases by amount in ISA for that year but interest earned in-between transition is taxable

Answer 69

Complete a nomination of beneficiaries again when inherit

Answer 70

No, spouse only

Answer 71

Transfers do not affect your annual ISA allowance: when you transfer funds from one ISA to another, it does not count towards your annual ISA subscription limit. You can still contribute up to the annual ISA allowance for the tax year to which the contributions apply.

Answer 72

Inheritance Tax may have to be paid after your death on some gifts you've given. Gifts given less than 7 years before you die may be taxed depending on: who you give the gift to and their relationship to you. the value of the gift.

Answer 73

Can control investment from 16 and access funds at 18

Answer 74

Around 4.5%

Answer 75

You can only have 1 S&S and 1 cash ISA

Answer 76

Only parents and legal guardians can open Junior ISAs for children under 16. Children aged 16 and 17 can open a Junior ISA for themselves.

Answer 77

To open a child's pension account, you have to be the child's parent or guardian but, once it has been opened, anyone can pay into it.

Answer 78

Any money you pay into someone else’s pension is normally considered a gift for Inheritance Tax (IHT) purposes. So usual 7yr rule applies.

Answer 79

Self assessment gives you a rebate or changes tax code?

Answer 80

As long as the total contributions fall within the annual allowance (£9,000 for the current tax year) anyone, including doting grandparents, aunts, uncles and friends, can contribute.

Answer 81

contributions to an ISA must be made with your own cash. Transfer from a bank account in your name - or a joint account you own. This means that someone else can’t directly add cash to your ISA. If you are looking to pay cash into someone else’s ISA, you can send them the cash first to their bank account, and they can then make the contribution using their bank account. The exception to this rule is a Junior ISA which can accept cash from anyone. Provided there is enough Junior ISA allowance remaining.

Answer 82

Investors are allowed to open and pay into multiple ISAs of the same type in the same tax year (except for lifetime ISAs).

Answer 83

You can have multiple ISA's of the same type, provided they were each opened in differen tax years. You would be able to open a new stocks and shares ISA and transfer the funds from the old ISA. If you want to transfer money you've invested in an ISA during the current year, you must transfer all of it.

Answer 84

There is no IHT to pay on gifts from husband to wife and vice versa, or from one civil partner to the other

Answer 85

Where most or all of an estate passes to someone's surviving spouse or civil partner, those assets are generally exempt from Inheritance Tax. This means that most or all of the nil rate band available on the first death is not used.

Answer 86

A trust is a legal arrangement where you give an asset to someone else so they can look after it for the benefit of a third person.

Answer 87

Bare trust - Has immediate right to assets income & capital and beneficiary cannot be changed Interest in possession trust - immediate right to assets income but not capital Discretionary trust - trustee has full discretion on how to use the trust as have number of beneficiaries Disabled trust - trust for a vulnerable person

Answer 88

CGT surcharge 4% on sale Income tax on rent Difficult tenants Gov. rules getting stricter

Answer 89

Returns v SJP £85k FSCS protection

Answer 90

SJP team dedicated to investing in best funds globally - Give that time back to you - Similar to fixing a leak at home can DIY and may do an ok job, may not or get an expert in to do it properly. Recent study carried out by Vanguard found that investors with a financial adviser on average earned about 3% per year more than DIY investors.

Answer 91

£85k FSCS protection

Answer 92

a way of taking pension benefits from money purchase pensions without going into drawdown or buying a lifetime annuity. Under the UFPLS option, an individual can take their uncrystallised pension funds in one go, or as a series of lump sums. Benefit - Can change amount of tax free cash taken on each withdrawal to ensure pay as little tax as possible when considering income tax also.

Answer 93

you leave your money invested and take a regular income direct from the fund.

Answer 94

When someone dies, you choose to amend will/intestacy and pass down your share to another beneficiary. 1 drawback is that you then do not have access to funds 2 rules: - all those negatively affected must agree - Have 2yrs to finish deed of variation or lose tax benefits

Answer 95

If contribution levels increase by 30% (Assessed over 5yrs) of what they usually would expected to be. (Assessed on 2yrs before, yr cash taken and following 2yrs). 70% tax

Answer 96

From age 55 but depends on the pension pot

Answer 97

Scheme can choose from age 55 (rising to 57 from 2028)

Answer 98

55 (rising to 57 from 2028)

Answer 99

If have £10k income tax bill for that tax year. Then invest £30k into VCT and get £10k back from HMRC as tax relief. Cannot invest and get relief on any more than IT bill for that year.

Answer 100

Can do a whole of market review and compare this with SJP stockbroking team (Roman Dartington). Just need statement showing value and where funds are invested for team to then show a comparison with what SJP would offer and performance comparison (discretionary fund management)

Answer 101

Can do a whole of market review and compare this with SJP stockbroking team (Roman Dartington). Just need statement showing value and where funds are invested for team to then show a comparison with what SJP would offer and performance comparison (discretionary fund management)

Answer 102

To get Pension Credit as a single person, your income must not be more than £173.75 a week. To get Pension Credit as a couple, your total income must not be over £265.20 a week. Savings - For both of above, if you have over £10k saved then there is a calculation for reducing amount received. Average claim is £3,900.

Answer 103

Usually 25% Maximum amount of tax free lump sum which you can receive during lifetime

Answer 104

£1,073,100 Amount tax free before age 75 or on death. Thereafter pay income tax

Answer 105

Yes, although pension savings aren't usually covered in a Will because they normally fall outside of a person's estate, meaning there's usually no inheritance tax to pay on them. You can mention your pension in your will if you want to eliminate any doubt over your wishes, but it's recommended that you still complete an EOW

Answer 106

Yes you still have access to £5k starter rate personal savings allowance. However, for every £1 of income you earn as earned income you then lose £1 of your starter rate. E.g. if you earn £13k then you would have £4,430 starter rate on top of your basic rate allowance of £1k. So effectively lose starter rate at £18,570.

Answer 107

**1** On death, ISA would become what’s known as a ‘continuing ISA’. This means no new payments can be made into it, but it’ll keep its tax benefits. The account will continue like this until the first of the following events happens: - It’s closed by your executor - Your estate administration is completed - Three years and one day pass after death **2** Two rules: - Rule 1 - If ISA passed to spouse/civil partner can get APS to increase ISA allowance for that year to keep ISA status & no IHT due to spousal exemption - Rule 2 - If passed to anyone else it loses its ISA status and passed to beneficiary but loses tax wrapper. Also may be subject to IHT

Answer 108

1. Your APS allowance will be the value of your spouse or civil partner’s ISA(s) on the date of their death, or the date it’s closed – whichever is higher. 2. On death the ISA will become a 'continuing ISA'. It will keep this status until the earliest of: - The completion of the administration of the estate - The 3rd anniversary of the date of death - The closure of the ISA due to all the funds being withdrawn In this case, the APS is equal to the higher of the value of the ISA on the date of the investor's death or the value of the ISA on the date it stops being a 'continuing ISA'. 3. Where an investor held ISAs with several companies, a separate APS will be available for each.

Answer 109

**Cash:** investors can make a cash contribution using their own cash or cash inherited from the deceased. **Investments:** investments held in the deceased's ISA can also be transferred into the surviving spouse or civil partner's ISA directly without needing to be sold. Where the value of any inherited ISA investments is less than the APS (i.e. the value of investments have gone down since the date of death), a top up payment can also be made with cash.

Answer 110

No, investments can only be transferred into an ISA with the same company with which the deceased held their ISA. If wanted to do this then may be able to proceed with APS with same provider then once in your name, transfer to other provider.

Answer 111

1. Calculate topslicing gain by dividing gain by number of years held (use calc) 2. Topslicing gain is for each segment so can multiply as many times as possible to fit within each tax band E.g £50,270 - £12,570 = £37,700 BRB Topslicing gain is £4,795 Non-Saving Income of £14,130 £14,130 - £12,570PA = £1,560 £37,700BRB - £1,560 = £36,140 £36,140 / £4,795 = 7.53 Can encash 7 segments to maximise BRB So 0% tax for onshore and 20% for off

Answer 112

Most likely not, may be able to purchase additional years but most cases this is not possible. Therefore can set up a DC pension pot to build contributions

Answer 113

Investment bonds which include a small element of life cover (potentially as little as 0.1%) are disregarded from the capital means test. Capital redemption bonds have no life assurance element so are included. SJP investment bonds include life insurance so will not be considered However, regular withdrawals taken from a bond will be included within in the income assessment.

Answer 114

Basic rate taxpayers are not subject to further tax on the gain Higher rate taxpayers are subject to 20% tax on the gain Additional rate taxpayers are subject to 25% tax on the gain The amount subject to tax is not 'grossed up' Must also consider topslicing

Answer 115

Basic rate taxpayers are not subject to 20% tax on the gain Higher rate taxpayers are subject to 40% tax on the gain Additional rate taxpayers are subject to 45% tax on the gain The amount subject to tax is not 'grossed up' Must also consider topslicing

Answer 116

All pension contributions - employee, employer or 3rd party

Answer 117

No. Now, the lifetime allowance is being completely abolished. This doesn't mean you can enjoy a bigger tax-free lump sum. Previously, you could take up to 25% of your pension as tax-free cash, but this has been capped at £268,275 across all your pensions.

Answer 118

25% of increased value

Answer 119

Yes, your beneficiaries may be able to take a tax-free lump sum of up to £1,073,100 and it is taxable at their marginal rate beyond this.

Answer 120

£3k total not per person, £3k total but can be split between people Can carry forward 1yrs unused annual gift allowance