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20 Cards in this Set
- Front
- Back
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What is a Tax wrapper? |
A tax wrapper is simply a tax shelter around an underlying investment that changes the way the investment is taxed. For example An ISA in its various forms. |
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Tax can be charged at two stages in an investment life: |
1. While the funds are invested 2. When funds are drawn or income is paid out. |
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What are the main taxes that affect investments? |
Income tax Capital gains tax |
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What are the different types of ISA's? |
Stocks and shares ISA Cash ISA Innovative finance ISA Help to buy ISA Lifetime ISA |
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Stella put in £4,000 per year into a cash ISA for the past 3 years. She received inheritance. I wanted to split the money between her cash ISA and 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. |
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In what circumstances is an additional permitted subscription (APS) over and above the usual investment limit, allowed in the respect of an ISA? |
An APS is allowed for someone who has died. The spouse/ partner of the deceased is able to make an additional ISA contribution to the value of the ISA Holdings of the deceased. |
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Following someone's death. The right to make cash additional permitted subscription last for the later of what length of the date of death? |
3 years from the date of death, or 180 days from the grant of administration which is later. For stocks and shares, the limit is simply 180 days after administration of the estate is complete. |
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Jane investor £10,000 into stocks and shares ISA that does not offer a flexible investment Jane withdrawers £1,760. Given the annual ISA investment limit is £20,000. How much can Jane pay in the current tax year? |
The redrawn amount counts towards James ISA allowance because he provides does not offer flexible investment facility, so she could invest a further £10,000 |
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What is the advantage of holding investments in a stock and shares ISA? Rather than holding collective investments directly? |
Investment held within an ISA, are free from income tax and capital gains tax. |
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Existing help to buy ISA customers can continue saving up to £200 per month until? |
customers who owned help to buy ISAs before Thursday of November 2019 , can save £200 per month until 30th November 2029 |
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What is the purpose of a lifetime ISA? |
lifetime ISA encourages people to save the purchase of the first home and/or for retirement. |
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An investor can increase the 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 limit for lifetime ISAs and help to buy ISAs count towards the overall ISA investment limit which is £20,000 in a tax year. They are not in addition to it. |
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Aaron, age 12, has a child trust fund. His mother wants to open a junior ISA for him instead , but she's unable to transfer the child trust fund into a junior ISA and Aaron cannot hold both types of accounts. True or false? |
False. Aaron's mother can transfer the trial fund into a junior ISA. However, it is true that Aaron cannot hold both types of accounts concurrently. |
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Which type of investment normally represents a higher risk?: An investment trust or venture capital trust? |
Venture capital trust would normally represent a higher risk to the investor that an investment trust because VCTs invest in newly established companies, which tend to be higher risk. |
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At what age can funds be taken for my child trust fund? |
18 |
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Kiran is contributing to help to buy ISA and a lifetime ISA. Which of the following is true? |
You can invest in both types of ISA and receive a government bonus from one of them |
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What is an additional permitted subscription (APAs) |
On an ISA holders death, The spouse/ civil part and I can make an extra ISA investment equal to the value of the deceased ISA. They can do this by transferring the ISA asset into their name or by physically making an additional payment. The allowance applies even if the deceased left the ISA assets to someone else. |
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What is an Enterprise investment scheme? (EIS) |
A tax efficient scheme to encourage investment into smaller high risk companies. Investment is into shares a qualifying companies. 30% income tax relief on investments up to 1 million per tax year. And CGT exempt. Both require holding shares for 3 years. |
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What is a venture capital Trusts (VCT) |
A form of a tax efficient investment trust investor in smaller high risk company shares. Unlike EIS, VCTs are collective investment - the VCT by shares in a number of qualifying companies and the investor hold shares in the trust. 30% income tax relief up to £200,000 investment per tax year. (Must be held for 5 years) dividends tax-free and exempt from capital gain tax. |
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Is there a penalty for withdrawing from a lifetime ISA |
There is 25% applied if funds are withdrawn for reasons other than the purchase of a first home. |
