revision

Question 1

shares in listed companies

Answer 1

• they are liquid
• share price based on the quality of management and amount borrowed
• share price does not always reflect the assets but the demand abd will be as volatile as equity
• the company pays coroperatuon tax on capital gains and rental income

Question 2

tax on shares is listed companies

Answer 2

• corporation tax on capital gain and rental income

Question 3

main feature of property of unit trust/investment trust

Answer 3

• unit can’t borrow like a property company
• they can invest in shares of property company or directly
• investment trusts can only a small amount of direct property they need to use shares. Investment trusts can borrow unlike unit trust

Question 4

what are the taxes s on property in unit trusts

Answer 4

there is no Corporation tax within the funds. The investor pays CGt when a chargeable event occurs and they have used their exempt amount

Question 5

How to qualify as a PAIF

Answer 5

• they have to be an oeic that mainly invests in property ( including REITS).
• at least 60% of assets must be in the property investment market
• at least 60% of net income must be from rent
• no corporate investor can hold 10% or more of business

Question 6

what is the tax on a PaIF in the fund

Answer 6

• 20% corporation tax on income that is not rent
• all rent is tax free

Question 7

what is the tax paid by investor on PIAF

Answer 7

• distribution of income is gross
• the money in is paid 20% net of tax .
• dividends are paid without any income tax
• when a PAIF is in a Sipp or isa the income is gross.
• all other income has already been taxed in the fund except rental income

Question 8

property in life assurance what is it and how is it tax

Answer 8

• life assurance companies hold direct holdings in property
• the value od unit is linked to value of property
• the fund cannot borrow
• liquidity is higher than with direct fund
• any income and capital gain is 20 within the fund ( not on investor)

Question 9

what’s a REIT, Who’s it aimed at and what makes it one

Answer 9

• A retail investment trust
• it’s aimed at individual investor not institutional
• must be closed
• they can’t be an OEIC
• must be resident
• only one class of share
• must be on a stock exchange

Question 10

tax on REITs - Which parts are Exempt

Answer 10

• there’s a ring fence letting part which is exempt
• the non ring fenced part is for all other parts
• 75% of the profit must come from the except part
  -75% is the fund must be in the exempt part. REIT can not borrow if it does it must be paid by at elsst 125% if not then it’s tax

Question 11

What is the Tax Treatment of REUT for an investor

Answer 11

• the Uk property income is paid paid net of 20% for basic rate. additional and higher rate pay the twenty then need to pay higher amount amounts on the gross. Non taxpayers can reclaim this
• ISA and Sipp get it gross
• Dividdenfs com non ring fenced part must pay normal dividend rate
• CGT applies to usual gain

Question 12

please explain the enterprise investment scheme and income tax

Answer 12

• it’s 30%
• claimed you to a maximum of £1 million or £2mil for knowledge intensive
• can claim previous tax year
• relief given as reduction to taxpayers liability
• relief withdraw if shares disposed of in 3 years

Question 13

explain Cgt and Enterprise investment scheme

Answer 13

• reinvestment must take place in the period beginning one year before and eding three years after the disposal giving rise to the gain
• differed gain will occour when EIS shares disposed unless in another scheme
• any gains that recieved income tax relief are exempt if they were held for three years
• losses are allowable for reporting. a reduction on the income tax relief is taken. Not happen for capital gain

Question 14

explain Conditions for enterprise Investjebt Scheme

Answer 14

• no relief if they own 30% of shares
• must have 250 employees or 500
• can’t have £15million in gross assets before or 16 after
  -can’t have raise £million 12 months prior or 10
• can’t sell for thrrr years
• can’t have a pre arranged exit provision

Question 15

Seed Enterpruse investment Schene

Answer 15

• get 50% income tax relief (providing its there )
• maximum annual investment of £200,000.00 a year
  must hold shares for 3 years
  can carry back income and capital previous year
  if income relief given then it’s also fee of CGT
  business relief of 100% for 2
  Conditions
  be unquoted
  employ 25
  can’t be 3
  have les than 350k in asset
  must meet the qualifying trade rules

Question 16

VT

Answer 16

• they are similar to investment trusts
• income tax relief maximum 30 on £200000
  dividends up to 200000 are exempt
• losses can’t be claimed or used
• if not held for 5 years income removed