ISAs and Pension Tax Wrappers Flashcards
1
Q
What is an innovative finance ISA?
A
Allows you to use your tax-free ISA allowance while investing in peer-to-peer lending and crowdfunding
and cash
2
Q
What happens to an ISA on death?
A
- Becomes continuing ISA
- No further funds can be added
- Income and gains are tax free until earlier of estate being administered, ISA being closed or 3 years and one day from date of death
- If ISA holder married/civil partner, spouse/CP can encash the inherited ISA and re-invest the proceeds using the APS allowance
3
Q
Describe lifetime ISA
A
- You must be 18 or over but under 40 to open a Lifetime ISA
- £4,000 each year, until you’re 50
- You must make first payment in before you’re 40
- 25% bonus from Government, up to maximum of £1,000 per year
- The £4,000 limit counts towards your annual ISA limit of £20,000
- Cash or stocks and shares, or combination
- You can withdraw from your LISA when buying your first home, aged 60+ or terminally ill with less than 12 months to live
- You’ll pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason
- When using to buy your first home, the property must cost £450,000 or less, must be at least 12 months after you make your first LISA contribution, must use a conveyancer/solicitor, must buy with a mortgage
4
Q
Describe a Small Self-Administered Pension Scheme (SSAS)
A
- Occupational pension scheme
- Membership usually restricted to controlling directors
- Maximum 11 members
- Must be established under irrevocable trust with trust deed
- Must appoint Pensioneer Trustee
- Can be used to buy commercial property occupied by company
- Can make loans to company
5
Q
Describe a SIPP
A
- Aimed at those that wish to have greater control over investment funds
- Pension wrapper that can hold investments tax efficiently
- Same rules on contributions, allowances and benefits
- Can be higher charges than other PPs
- Individual can use investment manager to make decisions
