CH27 - Tax-Efficient Investments, HICBC & Life Insurance Flashcards
Tax-Efficient Investments
Interest on National Savings Certificates and Premium Bond winnings are ?
tax free.
Tax-Efficient Investments
There are four types of ISA:
- Cash ISAs (including Help to Buy ISAs).
- Stocks & Shares ISAs
- Innovative Finance ISAs
- Lifetime ISAs (used to save for buying a first home or providing for retirement).
Income from an ISA is tax free.
Tax-Efficient Investments
In 2023/24, an individual can invest up to ?
£20,000 in ISAs.
It’s noly possible to subscribe to one of each type of ISA a tax year.
The investment can be split between the various types of ISAs in any combination, subject to the maximum investment in a lifetime allowance of £4,000 per annum (and £2,400 in a Help to Buy ISA used to save for a first home).
Tax-Efficient Investments
A Junior ISA is available for UK resident children under ? The maximum investment is ?
18.
£9,000 per annum (2023/24)
High Income Child Benefit Charge
The high income child benefit charge claws back child benefit where ?
adjusted net income of either the claimant or their partner exceeds £50,000.
Started to claw it back ~ 10 years ago.
High Income Child Benefit Charge
The charge is ?
1% of the child benefit for every £100 of adjusted net income in excess of £50,000.
Seen as bad as it drags more people into self-assessment, but personal pension contributions help reduce ANI.
High Income Child Benefit Charge
Where there are two partners in the household, the charge rests with the partner who has ?
the higher income.
Life Insurance
When a policyholder cashes in a ‘non-qualifying’ life policy, this will be a ?
‘chargeable event’.
Gains on a chargeable event are chargeable to income tax.
Life Insurance
Chargeable event gains are treated as the ? of an individual’s income.
‘top slice’
The gains are treated as savings income.
Gains on non-qualifying life policies are deemed to carry a notional 20% tax credit.
