What are the two main classes of share capital an investor can buy?
Ordinary shares and preference shares.
What is the UK dividend allowance for the 2025/26 tax year?
£500.
What tax are gains made on the disposal of shares typically subject to?
Capital Gains Tax (CGT).
What is a primary benefit of using collective investments like unit trusts or OEICs?
They offer diversification and professional management, pooling funds from many investors.
What is the key structural difference between an open-ended fund (like an OEIC) and a closed-ended fund (like an investment trust)?
Open-ended funds create or cancel units based on demand, while closed-ended funds have a fixed number of shares traded on a stock exchange.
The investment style that involves detailed analysis in an attempt to outperform a chosen index or benchmark is known as _____.
Active management.
What is a Key Investor Information Document (KIID)?
A document covering a collective fund’s objectives, investment policy, risk/reward profile, and charges, which must be given to an investor before they invest.
What is the maximum personal pension contribution eligible for tax relief in a year?
The greater of £3,600 or 100% of the individual’s relevant UK earnings.
What is the standard annual allowance for pension contributions for the 2025/26 tax year?
£60,000.
How many previous tax years of unused annual allowance can an individual carry forward for their pension contributions?
Three previous tax years.
How are investment income and capital gains within a registered UK pension scheme treated for tax purposes?
They are exempt from UK income tax and Capital Gains Tax.
What is the maximum tax-free Pension Commencement Lump Sum (PCLS) an individual can typically take from their pension pot?
25% of the value of the benefits, up to a maximum of £268,275.
In a _____ scheme, the retirement benefits are based on a formula, typically using salary and service, with the employer bearing the investment risk.
Defined benefit (DB).
In a defined contribution (DC) pension scheme, who bears the investment risk?
The individual member.
What is a Master Trust in the context of workplace pensions?
A multi-employer pension scheme structure with one board of independent trustees, offering a cost-effective solution for employers.
Products like pensions and ISAs, which benefit from preferential tax treatment, are known as _____.
Tax wrappers.
What is the overall ISA subscription limit for the 2025/26 tax year?
£20,000, which can be spread across different types of ISAs.
What are the four main types of ISA an individual can subscribe to in the 2025/26 tax year?
Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, and Lifetime ISA.
What is the annual subscription limit for a Junior ISA (JISA) in the 2025/26 tax year?
£9,000.
What is the annual subscription limit for a Lifetime ISA in 2025/26, and what government bonus is applied?
The limit is £4,000, and the government adds a 25% bonus (up to £1,000 per year).
What is the charge for early withdrawal from a Lifetime ISA if not used for a first home purchase?
A 25% charge is applied to the value of the withdrawal.
Term: Investment Bond
A single premium life assurance policy used primarily as a tax-efficient investment wrapper, where gains are subject to income tax rules.
How much can an investor withdraw from an investment bond each year as a ‘tax-deferred’ income?
5% of the initial investment, cumulatively for up to 20 years.
What is the key tax difference between an onshore and an offshore investment bond?
Onshore bonds are assumed to have paid 20% tax within the fund (gross roll-up is not full), while offshore bonds benefit from full gross roll-up with no tax paid within the bond.
