If a client is vulnerable, what considerations need to be in place?
- A range of communication methods
- Easy to understand products/literature
- Training staff
- Specialist support
State 5 types of income free from income tax
- ISA income
- NS& I Certificates
- Premium Bonds
- Lottery Winnings
- Compensation
- Some state benefits
What is the difference between a tax allowance and tax relief?
A tax allowance is an amount that you can receive without paying tax. Whereas tax relief is a reduction in tax for favourable behaviour
How does marriage allowance work?
Marriage allowance enables a partner who is a non-tax payer to transfer 10% of their personal allowance to their basic rate taxpaying spouse
What is taxable income
Taxable income is ones income less the allowances, essentially the income that they will pay tax on
Gilts are offered below par value and redeemed at Par value, do you have to pay CGT on gilts?
No CGT on gilts
How does Business Asset Disposal Relief work?
BADR reduces tax from 20% to 14% on the first £1,000,000 of gains from business
What is rollover relief?
Rollover relief allows for tax to be deferred where the proceeds are reinvited into a qualifying investment
Holdover relief involves in passing assets to either a trust or another person to pass the gain onto the new owner, how is the acquisition price treated?
For the new owner they are deemed to have acquired the asset at the purchase price of the first owner and will have to pay tax on full gain on disposal
What is a PET?
A PET is a gift where one persons estate falls in value and another increases in value
What is a CLT?
A CLT is a gift where one persons estate falls in value but another persons does not automatically increase in value - covering gifts to trusts
Which type of customer gets the most protection from the regulator and which gets the least duty of care?
Highest - Retail client
Lowest - Eligible counter party such as government bodies and other authorised firms dealing with their own account
What is the difference between morbidity and mortality
Mortality – Probability of death
Morbidity – Probability of illness
If you were off work due to sickness what government support is in place?
For the first 28 week statutory sick pay (SSP) is available with Employment Support Allowance (ESA) payable thereafter
How do with profits funds work?
With profits funds offer a smoothed return by paying a bonus in each year and some of the bonus in good years being kept back to pay bonuses in years which aren’t as well performing. It will then pay a terminal bonus at the end of contract
What does convertible term insurance enable
It enables a policy holder to convert at a later date to a whole of life policy or an endowment with no additional underwiring
How little time must you have left to live if you were to make a claim on a terminal illness beneift
Less than 12 months
Why would you set up an insurance policy on a joint life first death basis?
To pay off a mortgage/big liability
Regarding insurance policies and the outcome of underwriting, what does reducing extra risk, constant extra risk and increasing extra risk mean
o Reducing extra risk – risk reduces over time
o Constant extra risk – risk remains constant over term
o Increasing extra risk - as time goes by the risk will grow
What is a preferred out comes of underwriting
Getting terms offered at a better rate
When it comes to an insurance application for underwriting what is this technically?
It is technically an invitation to treat
What is classes as a counter offer in insurance
A counter offer is the underwriters decision on if they will treat that person and the terms of such
What are the qualifying rules for an insurance policy to escape a tax liability
- Term of at least 10 years
- Premiums payable at least annually
- Premiums in any one given year cannot be more than twice the premiums in any other year nor more than 1/8 of the total premiums over the term
- Maximum premiums to all such policies for individuals cannot exceed £3,600 for policies taken out after 6th April 2013
- Sum assured must be at least 75% of the value of the total premium payable over the term
An interest in possession trust has 2 types of beneficiaries, a life tenant and a remainderman. What are their rights
A life tenant has the right to trust income throughout their life whilst the remainderman has the right to the trust assets/capital on death of the life tenant
