CISI INVESTMENT RISK TAXATION UPDATED
EXAMS SCRIPT QUESTIONS AND ANSWERS SURE A+
✔✔VCTs provide: - ✔✔capital to start-up companies by offering tax benefits and
reduced risk, while still offering growth from companies
✔✔Physical ETFs can use ____ to increase their magins - ✔✔stock-lending
✔✔Mezzanine capital - ✔✔subordinated debt or preferred equity that represent a claim
on a company's assets that is senior only to common shares
✔✔Seed Enterprise Investment Scheme (SEIS) - ✔✔Aimed at investors in small start-
up companies.
Many conditions are the same as for EIS, but there are a few important differences:
- new qualifying trade
- Gross assets <£200k
- <25 employees
- been trading less than 2 yrs
- tax relief 50% of up to £100k (max £50k in one year)
✔✔Junior ISA contribution limit - ✔✔£9,000
,✔✔Growth Capital - ✔✔for mature companies looking to restructure or finance an
acquisition WITHOUT changing a company's ownership
✔✔Tax benefits of VCTs - ✔✔Dividends are tax-free for eligible investors
(cannot be claimed by trustees or companies)
✔✔ISA contribution limit - ✔✔£20,000
✔✔Contribution limits to pensions - ✔✔- £40,000 maximum
- reduce £1 for every £2 earned over £240k
- £4,000 at least allowed
- can carry forward from previous 3 yrs (up to £160k in one year)
✔✔Maximum guaranteed period under lifetime annuity - ✔✔10 years
✔✔Capital redemption bonds - ✔✔- NO insurance element
- purely for investment purposes
- only pay out on expiry or early encashment
✔✔What does an institutional investor receive in return for depositing a basket of
securities with an ETF? - ✔✔Depositary receipts in the form of creation units
✔✔Intestacy - surviving spouse - ✔✔entitled to STATUTORY LEGACY of:
- £270k
- personal chattels
- 1/2 of residue
✔✔Exemptions to CGT - ✔✔- private resident (PPR)
- antiques
- gilts
✔✔VAT Turnover Threshold - ✔✔£85k for 12-month period
✔✔OEIC tax? - ✔✔OEIC invested in at least 60% fixed-interest securities pay interest
(20,40,45%). Less than 60%, they pay tax on Dividends (8.75, 33.75, 39.35%)
✔✔Dividend allowance and rates - ✔✔Allowance = £2,000
Basic = 8.75%
Higher = 33.75%
Additional = 39.35%
✔✔Residence nil-rate band (RNRB) - ✔✔- £175k
- available on death to descendants or downsizing
, - tapered for estates at £2million or more
✔✔Maximum level of unremitted foreign income/gains to accrue - ✔✔£2,000
✔✔Income Personal Allowance - ✔✔£12,570
reduced by £1 for every £2 over £100k
✔✔Blind - additional exemption - ✔✔+2500 to personal allowance
✔✔Nil-rate band (NRB) - ✔✔£325k per spouse
(ie 650k for couple)
✔✔Capital gains made within an OEIC are: - ✔✔Exempt
✔✔Deed of variation - ✔✔must be within 2 years of death
Relating to valid will
All members must agree
Not be made for any consideration
✔✔CGT Annual Tax Exemption - ✔✔£12,300 (most residents)
then
10% for basic rate
20% for higher and additional taxpayers
✔✔Corporation Tax Rates - ✔✔Main rate on profits = 19%
Special rate for unit trusts and OEICs (and PAIFs) = 20%
✔✔Stamp duty reserve tax (SDRT) is levied on: - ✔✔shares transferred electronically
✔✔Stamp Duty Reserve Tax (SDRT) - ✔✔stamp duty levied at 0.5% on purchase of
dematerialised equities.
✔✔Remittance Basis Charge (RBC) - ✔✔alternative tax for foreign income and gains
UK resident 7 of previous 9 years = 30k
UK resident 12 of previous 14 years = 60k
✔✔Lower earnings limit - ✔✔£123 per week
for building up entitlement to state pension
✔✔Bare trust: beneficiary has ____ - ✔✔IMMEDIATE and ABSOLUTE right to both
capital and income
EXAMS SCRIPT QUESTIONS AND ANSWERS SURE A+
✔✔VCTs provide: - ✔✔capital to start-up companies by offering tax benefits and
reduced risk, while still offering growth from companies
✔✔Physical ETFs can use ____ to increase their magins - ✔✔stock-lending
✔✔Mezzanine capital - ✔✔subordinated debt or preferred equity that represent a claim
on a company's assets that is senior only to common shares
✔✔Seed Enterprise Investment Scheme (SEIS) - ✔✔Aimed at investors in small start-
up companies.
Many conditions are the same as for EIS, but there are a few important differences:
- new qualifying trade
- Gross assets <£200k
- <25 employees
- been trading less than 2 yrs
- tax relief 50% of up to £100k (max £50k in one year)
✔✔Junior ISA contribution limit - ✔✔£9,000
,✔✔Growth Capital - ✔✔for mature companies looking to restructure or finance an
acquisition WITHOUT changing a company's ownership
✔✔Tax benefits of VCTs - ✔✔Dividends are tax-free for eligible investors
(cannot be claimed by trustees or companies)
✔✔ISA contribution limit - ✔✔£20,000
✔✔Contribution limits to pensions - ✔✔- £40,000 maximum
- reduce £1 for every £2 earned over £240k
- £4,000 at least allowed
- can carry forward from previous 3 yrs (up to £160k in one year)
✔✔Maximum guaranteed period under lifetime annuity - ✔✔10 years
✔✔Capital redemption bonds - ✔✔- NO insurance element
- purely for investment purposes
- only pay out on expiry or early encashment
✔✔What does an institutional investor receive in return for depositing a basket of
securities with an ETF? - ✔✔Depositary receipts in the form of creation units
✔✔Intestacy - surviving spouse - ✔✔entitled to STATUTORY LEGACY of:
- £270k
- personal chattels
- 1/2 of residue
✔✔Exemptions to CGT - ✔✔- private resident (PPR)
- antiques
- gilts
✔✔VAT Turnover Threshold - ✔✔£85k for 12-month period
✔✔OEIC tax? - ✔✔OEIC invested in at least 60% fixed-interest securities pay interest
(20,40,45%). Less than 60%, they pay tax on Dividends (8.75, 33.75, 39.35%)
✔✔Dividend allowance and rates - ✔✔Allowance = £2,000
Basic = 8.75%
Higher = 33.75%
Additional = 39.35%
✔✔Residence nil-rate band (RNRB) - ✔✔- £175k
- available on death to descendants or downsizing
, - tapered for estates at £2million or more
✔✔Maximum level of unremitted foreign income/gains to accrue - ✔✔£2,000
✔✔Income Personal Allowance - ✔✔£12,570
reduced by £1 for every £2 over £100k
✔✔Blind - additional exemption - ✔✔+2500 to personal allowance
✔✔Nil-rate band (NRB) - ✔✔£325k per spouse
(ie 650k for couple)
✔✔Capital gains made within an OEIC are: - ✔✔Exempt
✔✔Deed of variation - ✔✔must be within 2 years of death
Relating to valid will
All members must agree
Not be made for any consideration
✔✔CGT Annual Tax Exemption - ✔✔£12,300 (most residents)
then
10% for basic rate
20% for higher and additional taxpayers
✔✔Corporation Tax Rates - ✔✔Main rate on profits = 19%
Special rate for unit trusts and OEICs (and PAIFs) = 20%
✔✔Stamp duty reserve tax (SDRT) is levied on: - ✔✔shares transferred electronically
✔✔Stamp Duty Reserve Tax (SDRT) - ✔✔stamp duty levied at 0.5% on purchase of
dematerialised equities.
✔✔Remittance Basis Charge (RBC) - ✔✔alternative tax for foreign income and gains
UK resident 7 of previous 9 years = 30k
UK resident 12 of previous 14 years = 60k
✔✔Lower earnings limit - ✔✔£123 per week
for building up entitlement to state pension
✔✔Bare trust: beneficiary has ____ - ✔✔IMMEDIATE and ABSOLUTE right to both
capital and income
