Exam Flashcards

Question

Positives of esg negative screening (4)

Answer 1

You can count out whole sectors or industries based on client preferences Identify and exclude companies that are deemed unacceptable by investors Can be used to be socially responsible or to avoid high risk industries with regulatory challenges Can chose environmental, social, governance dependent on preference

Answer 2

-potential for high growth -offer diversification so if one country has an economic downturn you have other available -Tolerance of risk required political risk -economic risk -currency risk -investment risk

Answer 3

Current income needs/current expenditure Further income needs/future capital expenditur Inflation assumptions Growth assumptions Timeframe/longevity Atr/cfl Current assets/income from all sources Downsizing/inheritance Charges Use of tax wrapper Income changes on first death

Answer 4

-Reduces salary for pension contribution -employee saves money-reduction in nic’s and employer nic’s -employer saves on nics -take home pay can be slightly higher -Employer pays into ps for employee-higher contributions at no cost to employer/employee -Employee must agree in writing -Cannot be retrospective -Cannot fall below minimum wage -greater standard of living in retirement

Answer 5

-Tax relief @40% -Tax free growth in tax wrapper -Increased retirement income -Improve tax efficiency of current arrangements -Will benefit from income tax and ni savings -Employer will contribute further ni increasing retirement fund -pension is iht free in death -admin arranged by employer -higher pcls in retirement -charges met by employer

Answer 6

What income coming from isa’s What interest rate deposit accounts/competitive? Any salary increases expected? Is kerry retunring to full time work or phasing? Claiming ni credits whilst on maternity What level will employer match for both pensions? Fees/charges Performance of s&s isa What is their state pension accrual? Any missing years? BR19 Pension early retirement charges Any inheritances due? Any poa in place? Any other employee benefits for Sam? When would they like to screen their investments for esg? Fund options within Sam/kerrys pension Affordability-define limited surplus Any private pension provisions

Answer 7

Maximise pension contributions for Sam 40% tax relief/tax free growth/income Sacrifice bonus into pension fund Maximise isa when have surplus Utilise full psa £500 Sam/£1000 Kerry

Answer 8

£140k Capital gains-sell units to utilise CGT allowance -Utilise dividend allowance on the £6375 income. £1000 @0% and £5375 @8.75% -Bed and isa unit trust -Transfer of deposit accounts into Carmens name-Potential utilisation of starting rate of savings for Carmen. First £5000 after personal allowance -Utilise gift allowance -Utilise outright gifts (pets) -Consider realising some of the unit trust gains and putting into a discounted gift trust with children as beneficiaries-immediate reduction to estate. Transfer of value as a pet-7 years-reduced by amount of retained payments based on underwriting Pension input Dwp benefits for low earners Consider ns&i Consider paying into jisa if parent setup Use of cgt exemptions Carry forward losses-registered anytime within four years after end of tax year and carried forward indefinately

Answer 9

Losses from current tax year must be applied against gains first Losses from previous years can be carried forward indefinitely if registered with hmrc within four years of the end of the tax year in which they are made

Answer 10

Establish the relationship Determine goals and expectation Analyse their financial status Develop plan Implement the plan Present the plan

Answer 11

Establish relationship Provide initial disclosure Fact find Determine ATR/CFL etc Determine affordability Analyse current savings/investments Research/formulate recommendations Make recommendations Suitability report Implementation Review

Answer 12

CLT if over NRB @20% Flexible Assets can be protected if circumstances change No named beneficiary At discretion of trustees (settlor can be one) Long list of potential beneficiaries Taxed on the trustees (£1000 srb @20 Beneficiaries get tax credit Periodic (10 years)/exit charges CGT in trust-has half the srb of £6150 then taxed at top rate of 20/28%

Answer 13

When transferring value into trust over nrb Chargeable at 20% Paid by trustees Or grossed up if settlor pays If settlor survive 7 years no further tax will be due but no refund of the 20% either Paid directly to hmrc

Answer 14

Settlor Original owner Can be trustee (to retain control) Can be beneficiary (no tax advantageous) Trustees Legal owners Control asset for term of trust Hold instructions to pass to beneficiary in the future Or just income 18+ of sound mind and good character Governed by trust law Beneficiary Intended recipients Some entitlement to income only At age 18 May have no right to benefit Can take legal action against trustees

Answer 15

Employer benefits dependent on salary eg death in service, sick pay, redundancy may be affected Dwp benefits dependant on income may be affected Future mortgages and loans could be affected if calculated using salary multiples

Answer 16

That salary will increase with inflation University fees may be requires Pension pot will grow welp Debts may increase Health may deteriorate Either could die Future expenditure Interest rates will change Inflation will happen Investment/asset growth will happen

Answer 17

Guaranteed by the government Premium bonds Direct saver Investment accounts Income bonds Direct isa Jisa

Answer 18

Exempt for IT and CGT on prizes £25-£50,000 input Can setup for other persons children eg. Grandparent of grandchildren Parent must provide identification documents Will be treated as a gift (pet/clt) Backed by government Fun way to save-can be gifted

Answer 19

Established if have IHT issues Settlor loans money to trust repayable at any point Dont lose control Trustees invest into investment bond Growth is immediately outside of estate Loan repayments funded through withdrawals from investment bond Regular repayments must not exceed 5% Loan rejoins settlors estate on death

Answer 20

1.identify the task/set financial aim eg. Plan for retirment 2.Questionnaire (each client completes q’s on priorities, time scales and responses to certain circumstances. And capacity for loss 3. Feed into computer (software produces risk score 4.Results are discussed with client to ensure they match individual perception of their risk profile. Adviser and client agree suitable ATR. 5. Asset allocation-score produced to recommend an asset allocation in line with the efficient frontier theory

Answer 21

Different programmes produce different results Closed questions only-clients cannot express their views or cater for ethical Can misinterpret Ignore CFL/need to take risk Different profile may apply for each financial aim Results should be discussed to check the clients perception of their profile

Answer 22

Won’t feature the 5% investment bond Withdrawals eroding the fund Both outside of estate for IHT after 7 years Discount is value of retained future benefits this reducing IHT liability Growth in investment bond is immediately outside of estate Over Nrb is Clt on both Taxed same in fund if discretionary trust. Discounted can be setup under a bare trust for different tax treatment No investment risk

Answer 23

They can be trustees and have discretion over income/capital to the beneficiaries They can change the outcome at any Point should they wisj Not automatically entitled to trust assets at 18 (like bare trust) When an income distribution is made to a beneficiary it will be taxed at 20/8.75% below £1000 and 45/38.1% over £1k. Beneficiary distribution will come with a tax credit and taxed accordingly-they can claim back. Must be included on their self assessment Outside of estate after 7 years-they have a IHT issue Can drip feed income or ls into trust over time

Answer 24

Periodic charge on 10 year anniversa Paid by trustees by filling out IHT100 Based on value of the trust fund in excess of nrb 6% charge

Answer 25

No sick pay arrangements in place-would have to rely on statutory which only covers a max of 28 weeks. Far less than is needed to cover Sams salary No sick pay benefits for Kerry. Statuatory only No income protection for either Sam is the breadwinner and the family would be impacted through his loss of ability to earn. No family income benefit in place. No pension death benefits for Kerry although sum accrued in pension pot will pass directly to surviving spouse They have financial dependant children No critical illness Limited surplus cash to spend on protection policies No Pmi No Poa in place They have a 75% ltv mortgage. Only 55% of the loan is covered by the life cover No cover on second death/no cover if Kerry dies Some emergency fund-deposit/isa Would have to rely on limited savings in deposit account and Isa’s No nomination of wishes to ensure pension passes to correct beneficiaries on death

Answer 26

-Suits families with young children Often used to cover the financial dependancy of children Indexed to keep pace with inflation Cheap so good for tight budget Term decided at outset Pays out until the end of the term Can be level, decreasing or increasing payments Decreasing-If claim made later in term payout will be less monthly, quarterly, annual LS instalments after death of assured within terms Tax free income Simple underwriting Can be placed in trust Known cost/affordability

Answer 27

Where member is offered higher initial pension In return for giving up future guaranteed increases Good if want to enjoy higher income whilst they are active and healthy in early years of retirement May receive a higher pcls If in poor health they may want to have a higher initial If live linger than expected may be impacted May impact entitlement to means tested state benefits as higher in omr

Answer 28

PPf instructs scheme to carry out valuation Valuation is theoretical cost of buying out the schemes benefits with an insurance company scheme trustees develop recovery plan Increase member /employer contributions/reduce/stop all future accruals/revise investment strategy/extend nra If significant changes it must consult with employees

Answer 29

Guarantee on a scheme pension-income taxed as recipients pension Guarantee on lifetime annuity-received free of income tax Guarantee on lifetime annuity above age 75-taxable on recipient

Answer 30

Where an annuity is setup as joint life with the contingent interest paid to dependant or nominee Free of income tax before 75 Taxable on beneficiary after

Answer 31

Can be guaranteed for no more than 10 years Can be set over a certain period where if a member dies in that period the recipient can continue to get benefits Hmrc do allow a scheme to cease payments if recipients Remarriage/reach 18 Possible to commute to trival commutation lump sum instead of income

Answer 32

Max 39 weeks or when return to work in that period Must inform employer of pregnancy Confirm with a form from your doctor/midwife Min 28 days notice of when taking maternity Starts on day of maternity leave start £172.48 pw or 90% of weekly rate (whatever is lower) Employer may top up to full pay/half pay through contractual maternity pay Taxable and NI Nothing after 39 weeks (9 months) Could take annual leave accrued To qualify-must earn at least £123 a week for min 26 weeks prior

Answer 33

How the couple would define ethical investing. Their understanding of environmental, social and governance practices. The measures of ethics that are acceptable to Sam and Kerry. Knowledge and acceptability of positive, negative or neutral screening to the couple. Their experience of assessing investments for ethical practices. Ability to carry out ethical screening personally. Views on trusting ethical screening to a fund manager. Depth to which they want their investments to be screened, such as: -just the companies they invest in. -the banks that the company uses. -the practices of the company's customers. The customers that Sam and Kelly's deposit-holders deal with, and the companies that they finance. Which companies are held within their ISA funds and the extent to which they apply ethical / ESG practices. Companies invested in by the funds held within the couple's workplace pension schemes. The couple's views on restricting investment choice to companies that meet their criteria. Whether they expect ethical funds to have a positive or negative effect on fund performance. Past performance of alternative investments that meet their criteria. Reasons for holding these views: is it moral, religious, social, or environmental values?

Answer 34

The couple are both currently retired, and both are past State Pension Age. We do not know their required income levels and capital requirements. They have a medium attitude to risk . They have two adult children and four grandchildren. They have a mortgage-free property valued at £570,000, no apparent debts, as well as other savings and investments. Both Declan and Carmen are in receipt of their Single Tier State Pension. Declan is currently in receipt of £10,300 per annum gross from his State Pension, which appears to be more than the current maximum. He could have a protected payment which will escalate only in line with CPI. Carmen is in receipt of £6,200 state pension as she has an incomplete NI record due to extended periods of no paid employment, although we don't know the reasons why. Both protect the couple from longevity risk as they are paid for life. State pensions are paid gross but are taxable. The state pension is usually escalated in line with the Triple Lock; so the higher of 2.5%, CPI and NAEI changes, giving the couple valuable inflation proofing. State Pension deferral is an option for both, even though payments have started. There is the option to top up Carmen's NICs to obtain her maximum entitlement even though she has passed SPA and is already receiving payments. The deadline to buy back extra years has been extended to April 2025, allowing Carmen to pick up years from as far back as 2006. Declan has an annual £45,000 scheme pension in payment. He will be entitled to statutory escalation / indexation. We have no idea if the scheme add any discretionary increases, or its funding status. This income is guaranteed to be paid for as log as Declan lives which, as he is in good health, could be along time! We do not know if the scheme provides any death benefits for Carmen, the amount or in what form. We don't know Declan's views on this guaranteed income stream versus taking a CETV and accessing flexible benefits. Unlikely to be anything built in for the children, as they would not be classed as dependents, whereas Carmen would be as Declan's spouse.

Answer 35

Highlights periods where income or capital is in deficit / surplus. Allowing Declan and Carmen to take any required actions now to either prevent a deficit or to maximise opportunities. Can help our couple achieve their aim of obtaining a sufficient income throughout their retirement. Analyses different scenarios such as living too long, running out of monies, not having enough for a comfortable retirement. Can demonstrate the impact of increased inflation on income and capital. -And the effects different scenarios have on levels and requirements. Pinpoints areas of finance where costs can be cut, or additional investments made. Identifies potential issues or opportunities. Gives Declan and Carmen the opportunity to discuss with an adviser how to plan for and / or overcome potential shortfalls.

Answer 36

The couple may live longer than expected. The process uses many assumptions; it is an estimate only. Inflation assumptions may be incorrect. The investment growth assumptions may not be met; these are not guaranteed and there may be adverse market conditions. The couple's personal circumstances may change. Taxation rules / legislation may change. Government's attitude to underwriting public-sector pension schemes may change. ATR / CFL may change. Charges and fees may be higher than expected. The process provides a snapshot at one point in time; in practice, regular reviews will be required. There could be input errors / human error / misunderstanding of information by Declan and Carmen or by their adviser.

Answer 37

Typically cpi to a max of 2.5% >2005 Different escalation rate for different years

Answer 38

The difference between someone starting amount (the excess over the state pension at 2016 eg/ £155.65) is the protected payment Paid on top of state pension Protected payment increases in line with CPI each year in April

Answer 39

When markets are falling Effect of having to cash in more amounts than usual to achieve same amount In order to support a regular amount of income Eg. Declans/carmens isa/unit trusts

Answer 40

That the order and timings of your clients investment returns are unfavourable leading to less money for retirement

Answer 41

Natural doesnt erode capital Eroding capital= less natural income Natural isn’t a disposal for Cgt. Fixed could trigger a disposal for CGT as selling capital Its what dividends do naturally, Doesnt affect capital element CGT allowance in decreasing leading to higher potential charges in 2023/24

Answer 42

Could use previous losses against any chargeable gain Amount is defined in line with budget so know what receiving at each interval Natural income can fluctuate eg dividends If just take natural, the cgt allowance remains unused, cannot carry forward

Answer 43

Income v outgoings Outgoings in the future When events will take place Impacts of Ltci Impacts on death/death benefits Big capital expenditures/uni costs Impact of IHT planning Impact of inflation Investment returns/performance Life expectancy Costs/charges Put into software Generate what if scenarios Highlight problems Put plans in place for surplus/deficit

Answer 44

Cash equivalent transfer value If they’d prefer flexibility over guaranteed payments Unfunded public sector schemes dont have automatic right Cash lump sum that is then invested in a new pension arrangement

Answer 45

The couple are using equity income funds predominantly, with the aim of generating income. S&s Isa Asset allocation would be geared to a rising income stream. Yields would be income tax free, and therefore higher Yields would not need to go on the couple's annual tax returns. Capital growth would be tax-free, saving Declan and Carmen 20%/ 10% capital gains tax respectively above their annual CGT exemptions. ISA are liquid assets so could be used for any ad hoc capital needs. Unit trust The couple have their unit trust held jointly, meaning income would be tax-free up to each of their annual £2,000 dividend allowance; £4,000 between them. They could realise gains of up to £12,300 each; £24,600 combined without a CGT liability. They could gradually bed and ISA their unit trust investment into the more income and capital gains tax efficient ISAs. This could boost the couple's retirement income, maximise more of their allowances and help with their objective of sufficient income in retirement. Both ISAs and the unit trust would form part of their estate for inheritance tax.

Answer 46

Pound cost ravaging opposite to pound cost averaging. When withdrawals are taken from a fund during market downturns: more units will need to be sold to provide the money for Declan and Carmen's £500 a month fixed withdrawals from their ISAs; -this can lead to a rapid reduction in the value of the fund; -exaggerates the effect of volatility. Sequencing risk where higher fund withdrawals are taken in the early years of taking income from a fund, such as in retirement, in an environment of poor market returns the fund value will struggle to recover due to the drag created If good growth within fund in early years theres sufficient build up to not be as impacted by withdrawals With the market volatility over the last few years and their retirement this will have contributed to their withdrawals having an impact on the fund values. The concern over this could have lead to them wanting to ensure that they will have sufficient income throughout retirement.

Answer 47

When a fixed level of income is taken, its not always taken from returns from the fund. Part of the withdrawal may be from the capital Pound cost ravaging or sequencing risk can apply if the withdrawals are made during market downturns. Adversely affecting the fund growth. This would lead to capital erosion of the fund value. Capital withdrawals on the unit trust portfolio would lead to Capital Gains Tax calculations which, as the portfolio is currently showing a £140,000 gain, could lead to a CGT tax charge. They do not appear to be making use of their capital gains tax exemptions currently, and as a joint portfolio, they could use both of their exemptions. They would have a known level of income that could support their expenditure in retirement. If they kept to the current 'ongoing dividend income' this would fluctuate each year and not provide them with a guaranteed amount. Capital withdrawals from the portfolio would reduce the future fund growth. It would also reduce the level of natural dividend income received by the fund. If they continued to take the ongoing dividend income then they would not be taking capital withdrawals from the fund, leaving their CGT exemptions unused. The CGT exempt amount is reducing from £12,300 in the 22/23 tax year, to £6,000 next tax year, and £3,000 the year after.

Answer 48

The couple currently have between them stocks and shares ISAs and a jointly held unit trust. All these investments are all relatively liquid. They can access the ISA investments without CGT implications, currently saving 10% or 20% in CGT above their annual exemptions. They are over the IHT thresholds currently. Using their investments for income and capital needs can help to reduce any IHT due on second death, as they will be depleting these assets. Some of their ISA and unit trust investments could be in funds that do not align with the couple's medium ATR (we need more info on asset allocation of UK, European and Global Equity and UK Equity Income funds). As a result, using these will start to balance their overall portfolio to the medium ATR they are more comfortable with. They could move the funds in Carmen's S&S ISA and the couple's joint unit trust to ones that distribute income by switching to distributing funds. By encashing the unit trust over a few years, the couple can use each tax year's CGT exemption, although the exemption amount is reducing in future tax years.

Answer 49

Both increased payments helping with retirement aim 1% for every 9 weeks/5.78% for each year Guaranteed for life and avoid longevity risk Income escalated in line with triple lock-beating inflation risk Investment risk avoided Greater peace of mind knowing it will be higher and guaranteed

Answer 50

Money help with living costs if unable to work Support to get back into work Pay class 1 nics-means tested Counts towards ni credits for state pension etc Means tested on nics in assessment phase/not after 2 rates (1 for those those in work related group/1 for support group) Paid every 2 weeks Administered by dwp Can claim whilst working less than 16 hours a week/do not earn over £167 pw Stop at state retirement age Taxable

Answer 51

-Establish likely expenditure required (broke down by fixed v discretionary and capital requirements) NEED -Consider health/longevity -potential ltc costs (regular or lump sum) HAVE Consider what they have -list Assumptions made (health, inflation, costs/charges/risks) Computer software What if scenarios Surplus/deficits Plans in place

Answer 52

Fixed withdrawals aren’t always covered by natural distribution/returns That means some of each withdrawals must come from capital If made during a downturn, pound cost ravaging or sequencing risk could adversely affect the funds growth Capital erosion of fund value Could lead to capital gains tax charge-already showing a large gain They dont appear to be using their cgt allowance and could as joint £12,300 eaxh Capital withdrawals will reduce future fund growth Would also reduce natural dividend If they didnt take capital then their cgt allowance would go unused The cgt amount is reducing from £12.3 to £6k next year and further to 3k after

Answer 53

Funding status-the scheme trustees have to do a valuation every three years Done by comparing its assets to its liabilities If scheme in deficit it must produce a recovery plan Agreed with employer and pension regulator TPR sets out advice on how trustees should track financial strength If employer becomes in solvent it will transfer to PPF to determine if over or underfunded. 90%/100% 50% spouse same with death ben Maximum cpi cap on escalation which will see the fund erode over time eg max 2.5/5% dependent on when accrued

Answer 54

The risk benefits wont last. Not a problem with state pension or db scheme

Answer 55

-Been available to db schemes that start winding up from 6th April -where the scheme is underfunded and employer suffers and insolvency event -must be insufficient scheme assets to provide member benefits equal to ppf min levels -assessment period can be 12m-3years -no further benefits can be built up and no cetv paid -100% of declans £45k protected -no cap -as he is a pension member (took benefits from scheme nrd and not earlier) -stat inf proof capped at 2.5% -50% spouse pension would be built in

Answer 56

Timescales Personal investment experiences Existence of dependents/spouse Emergency fund requirements Economic/legislative environment Influence of family/friends Change of requirements in cost of living Levels of savings and investments Guaranteed income via deca db and carmens annuity Fact their home is owned mortgage free Having inflation lined benefites Ability to increase carmens sp via class 3’s

Answer 57

-Must be living together at death -Can be made to a cash, s&s, innovative isa, lisa (max payment limit applies) -Will increase survivors to £40k -Can inherit the allowance regardless of whether in receipt of the benefits through the will -Value is value of isa on death or date of probate (whatever is highest) -3 years after death or 180 days after estate administered -Can keep in original isa, transfer to own, open up new (you can have more than one isa type) -Counts as previous years subscriptions -Surviving spouse must liaise with the isa manager, completing an application to facilitate providing various info name etc. -or executor can close account or sellf investments/release fund to beneficiaries -admin of estate complete -can then invest in line with own atr

Answer 58

Keeps lifetime tenancy Sells part or all @crap price=gets lump sum eg1/3 of market price Can still gain from future appreciation on part not sold Can release in tranche Cannot make change Improvements expected >65’s Older you are the more money you’ll be able to release Retain share for iht purposes

Answer 59

-Lump sum or drawdown -for over 55’s -rate dictated on length of tie in/age -loan against property/repaid when sold -interest applied at fixed rate and rolled up and compounds -benefits might be affected -reduces estate -very expensive in current market

Answer 60

Can defer at any point (only once) Min 9 weeks to get 1% increase 5.8pa No death benefits so lose if dont use (estate can claim 3 months in arrears) If HR tax payer may be beneficial to defer until BR if in good heath you coudl defer for a higher income later No lump sum/income only Can defer at point of payment or when in payment Longevity risk avoided Investment risk avoided

Answer 61

Can take it with money remaining after taking pcls -not a trigger for mpaa -level set at outset -guaranteed for life -underwritten to determine persons life expectancy/longevity -annuity rates are linked to interest rates so likely to be high currently -guarantees can be built in so spouse benefits but no good if they also die -annuity is taxed only on the interest element, not the return of capital -indexed to keep up with inflation

Answer 62

-Convenience-all investments in one place -Execution only -Wide range if investment funds and choice of managers -access to different asset classes that align to their medium atr -One simplified report for tax return purposes -Online access can give our couple up to date values easily -Automatic rebalancing is available -a platform can help simplify things for our couple

Answer 63

Lasting power of attorney health and welfare should be setup Lasting power of attorney property and Financial affairs Attorneys setup (normally spouse and children) Must register with office of public guardian/pay fee Person must be consulted on all matters if has capasity Can manage spouses bills/accounts /financial affairs

Answer 64

-Can document their wishes in relation to welfare/financials -Peace of mind for family -Avoids delays in court of protection if dont have one -ensure trusted attorneys are in place Iht planning is restrictred Lpa cannot be revoked ince capasity lost Charges involved Delays in setting up

Answer 65

-Rather than buying shares with a ls you regular buy shares so over the average it works out better -share prices rise and fall -can be favoured during volatile markets -an investor who buys as lump sum may miss out on buying cheaper shares -this could impact their returns -if an investor is nervous about the stock market they can invest gradually giving peace of mind Downside If the market goes up that means you could have bought all your shares at a cheaper price=higher return Anything not invested is likely liquid cash and has inflation risk The market will still go down and impact returns Delaying gives it less time to grow

Answer 66

Managing the money/assets in the trust for the benefit of the beneficiaries -exercise their discretion over the income/capital of the trust between potential beneficiaries -can assign own or have an independant professional trustee -consideration should be given into who -avoid losses -must adhere to trust deeed - Ensure they are registered as the legal owners/hold the title deeds to property Act in the best interests of the beneficiaries with due diligence and integrity Avoid conflicts of interest Treat property as if it were their own Protect trust property Keep proper accounts, report to hmrc Review investments, invest cash immediately Ensure investments are suitable/diversified (standard investment criteria) Obtain professional advice if appropriate Invest cash appropriately

Answer 67

-Additional source of income for retirement -Good health so normal life expectancy -Tax as savings income psa of £500/£1000 available -Indexation can be built in -Can be setup on joint life, passing to the survivor on first death, greater peace of mind -Cash sitting in deposit is eroded by inflation, interest likely to be low -Deposit acc will not be providing a real return (above inflation) -Annuity income will be higher than conventional income due to return of capital

Answer 68

Level annuity-pays same income over time. Vulnerable to inflation over time. Higher starting income Escalating annuity-rise each year at fixed rate Impaired/enhanced annuity-pay out if health/lifestyle may shorten your lifespan. Requires eligibility Lifetime annuity-income for life

Answer 69

-Immediate needs annuity -

Answer 70

Exempt for IT and CGT on prizes £25-£50,000 input Can be held in beneficiaries name Can setup for other persons children eg. Grandparent of grandchildren Parent must provide identification documents/hold investments Winning scan be reinvested to increase the value held in plans Can buy when over 16 Will be treated as a gift (pet/clt) Backed by government Can access when you wants Interest rate funds prizes In line with obj

Answer 71

Not inflation proof which might not suit dec and carmen with uni costs bound to increase Fully available at 18-no good for objectives

Answer 72

When banks building societies need to meet sudden cash demands Like a bond-for a fixed period at a fixed rate Treasury bills, commercia bills, cert of depositis

Answer 73

-£25pm or £300 as monthyl installment -or £270 as lump sum -can be held in the beneficiaries name -no tax on income or gains if held for 7.5 years -funds grow tax free -deposit, managed/mixed funds and with profit -fairly high degree of security

Answer 74

As settlors they select trustees (at least two in case in dies. Themselves so retain control over distribution of assets//if uncomfortable couldnasign profession trustee) Define pot beneficiaries (can include classes of beneficiairies to capture unborn grandchildren//avoid themselves to not further iht) Settlors decide how assets in trust should be used via trust deed Create letter of wishes-tells trustees how to deal with assets Register with hmrc

Answer 75

With a loan trust there is no transfer of value, there is no gift Whereas with a dgt there is, discounted the the value of the future retained payments For both the growth is outside of the estate Gift exemptions can be applied so loan doesnt have to be fully repaid Both use the 5% withdrawals Dgt is an immediate reduction in estate for iht, loan trust is not

Answer 76

-Being in a bond reduces admin duties of trustees -iht saving over time-growth -Regular payments -Payments not subject to tax -if keep to 5% repayments it will stop the trust paying income tax on withdrawals -dec and carmen could be trustees retaining control -loan payments could be used for grandchildrens uni fees -within annual iht amount -5% withdrawals would mean repaid in 20 years

Answer 77

Clts/pets in last 7 yrars Apply exemptions £3k Determine if any clts have been paid at 20% Timeline all the transfers in order Determine available nrb (own and inherited) Apply failed pets Taper relief Lifetime iht 20% Calc value of estate Apply nrb/rnrb Excess at 40% or 36%

Answer 78

Calculate nrb availability on death Timeline all transfers Apply each transfer in last 7 years against nrb If below nrb no tax If above nrb 40% Apply remaining nrb to estate and tax at 40%

Answer 79

-professional investment management -peace of mond -greater diversification -liquid -costs and charges less than going direct -no stamp duty in collective -wide choice of funds/sectors -gains and divs/savings income use allowances

Answer 80

Encash inv Up to cgt allowance Buy back shares in isa with proceeds No stamp duty As quick as possible so less time out of market

Answer 81

Cgt on unit trust calculated-overall sale costs v original inv Find out all original investment amounts and add all up Calc amount being sold Minus acquisition/base cost from sale proceed Minus acquisition and disposal cost Split gain 50/50 Minus losses in current year Minus registered losses Minus available cgt exemption Taxed at 20/10 Payable by jan 31st after

Answer 82

Views on inflation Intention to return to work Cost of childcare Financial dependance of children Bonus variability Job security/increases Pension nomination forms Use ofTrusts Willingness to increase pension contrib Guardianship details for children

Answer 83

Term Amount outstanding Mortgage payments basis Interest rate Monthly repayments Budget/affordability Personal preferences View on interest rates at end of term Lender charges Overpayment facility Level term assurance Protection needs Atr Desire for early repayment Inheritances

Answer 84

Pension input amount (Employer and employee input-calculate how much total) Over the tax year Minus annual allowance Equals current remaining for this year Carry forward from three previous tax years (current then earliest one applied first) Restricted to 100% of gross earnings (85k minus £4250 5% contribution) £80,750 Annual allowance is he exceeds aa in this year and cumulative three years

Answer 85

-Agreement -Employer contribution -No tax or Ni as comes out of gross pay -Employer saving-further ni into sams pension -bigger pension to help with retiring early -pension grows free of it and cgt -passes iht free -low cost-employer subsidises -admin done by employer

Answer 86

-£4k per year -Part of £20k allowance -Under 40 to start a plan/contribute until 50/access at 60 -25% bonus £1k top up -for pension use as already have first home -can invest in cash/s&s/wide range of funds -25% claw back if taken early or not for this reason -could be part of retireing early plans

Answer 87

Emergency fund-use psa on savings income Isa allowances Jisa ns&i Salary sacrifice bonus Pension contributions up to annual allowance Oeics or similar collectives to use div allowance and cgt exemptions not currently used Eis/vct Pension nomination forms/wills/guardians for children

Answer 88

Dwp benefit payable when one person dies pre state pension age Need sufficient nic record Young dependents=higher payment Monthly payment for max 18 months Plus one off LS £350 ls and £350 monthly Tax free Claimed within three months of deceaseds death

Answer 89

Lump sum Premium amount based on health Tax free if paid to care home/taxable if not Qualify for ILA if cannot complete 1 ADL Based on mortality risk Guarantees can be built in if die soon Can be level or Index linked More expensive than deferred Poorer health=bigger annuity Quids in if live longer than provider estimates

Answer 90

-Long term care fees for those who cannot complete daily task -Can be immediate or pre funded

Answer 91

Required when can no longer do ADL (eg. Keep safe, clean) Your contribution to long term care is means tested by the gov Features Pays an income until death Deffered care-own care for x years Immediate needs-ls paid based on perceived life span Pre-funded policies-paid for before care needed equity release-Lifetime mortgages (paid back when die) or home reversion plan (sell part/all of home) Premiums As lump sum-for immediate of future By regular premiums (pre funded build up) Whole life-policies pay out on need Equity release-money from House Benefits Paid for all/part of period policyholder cannot live without assistance Annuity pays for life

Answer 92

Lump sum premium Impaired life annuity Based on health and life expectancy/mortality risk Guaranteed income for life Used in home or care home Income tax free if paid to care provider Or taxed as purchased life annuity if paid to settlor

Answer 93

Immediate needs Pre-funded Equity release and lifetime mortgages WOL-sum assured pays out on care Fund with own investments

Answer 94

-Help with extra costs if have a disability so severe you need someone to help look after you -if pay for own care you can claim -Pays for care for those at SPA or physically/mentally disabled -Not means tested against income or savings -2 rates (lower rate for night//higher rate day and night or <6 months to live) -Paid weekly -Tax free -Can use for anything (taxis, bills, cleaner etc)

Answer 95

-For long term mentally/physical disabilities or those who find daily tasks hard -2 elements (part 1 daily living-help with everyday tasks//part 2-mobility part-help getting round) -Youre assessed by dwp as to what ones needed -Tax free -Paid to individual to spend as they wish

Answer 96

Taken out when needed Lump sum premium Impaired life annuity Based on health and life expectancy/mortality risk Guaranteed income for life Used in home or care home Income tax free if paid to care provider Or taxed as purchased life annuity if paid to settlor

Answer 97

-When changes employer benefit will be lost -He has no way to affect the policy -Employer could adjust the policy to make it less appealing -only provides cover for death/not ci/long term illness -leaves sam and kerry on stat sick pay -Dis could reduce if reduce working hours -complete lack of control for sam -insufficient cover-not enough to cover sams salary long term

Answer 98

Family/friend influence Timescales Things that give them security Change of requirements Having assets Having experience Security in economy Having time until death/retirement

Answer 99

Hmrc notified of death Iht ref number obtained Value calculated Plus Any pets/clts added Plus Loans Minus Debts Minus funeral costs Minus transfers to charities Deduct nrb/rnrb Plus any transferred nrb 40% on estate Paid within 6 months of death Then apply for probate

Answer 100

-holdover the gain into trust-payable at lower rate when dispose of trust Instaspousal transfer-pay at lower rate of 10% Progressively dispose of units under allowance Invest in eis Invest in seis