R03 25/26 (Key Points) > R03_flashcards_section_Nine > Flashcards

R03_flashcards_section_Nine

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1
Q

What is the minimum premium bond holding with NS&I?

A

£25

NS&I requires a minimum Premium Bond investment of £25. The figure remains unchanged for 2025/26.

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2
Q

What is the maximum premium bond holding with NS&I?

A

£50,000

Premium Bond holdings are capped at £50,000 per individual, unchanged for 2025/26.

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3
Q

Are Premium Bond prizes taxable?

A

No

All Premium Bond winnings are completely tax free in 2024/25 and 2025/26.

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4
Q

What is the minimum deposit for NS&I Income Bonds?

A

£500

Income Bonds require a minimum investment of £500. This remains the same for 2025/26.

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5
Q

What is the maximum holding for NS&I Income Bonds?

A

£1 million, or £2 million for joint accounts

The limit applies per account holder, unchanged for 2025/26.

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6
Q

How often do NS&I Income Bonds pay interest?

A

Monthly

Income Bonds pay variable monthly interest taxable as savings income.

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7
Q

Is interest from NS&I Income Bonds taxable?

A

Yes

Income Bond interest is taxable as savings income both for 2024/25 and 2025/26.

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8
Q

What is the minimum investment for NS&I Green Savings Bonds?

A

£100

Green Savings Bonds require at least £100, unchanged for 2025/26.

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9
Q

What is the maximum investment in NS&I Green Savings Bonds?

A

£100,000 or £200,000 joint

These limits apply per issue, unchanged for 2025/26.

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10
Q

How long is the term of NS&I Green Savings Bonds?

A

Three years

Funds are locked for three years with no withdrawals permitted.

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11
Q

When is interest from Green Savings Bonds taxed?

A

At maturity

Interest rolls up and is taxed as savings income at the end of the term.

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12
Q

What is the minimum investment for Guaranteed Growth Bonds?

A

£500

NS&I requires at least £500 to open a Guaranteed Growth Bond.

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13
Q

What is the maximum investment for Guaranteed Growth Bonds?

A

£1 million or £2 million joint

Limits apply per holder, unchanged for 2025/26.

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14
Q

Are withdrawals permitted from Guaranteed Growth Bonds?

A

No

These bonds lock in money for the full three-year term.

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15
Q

Is interest from Guaranteed Growth Bonds taxable?

A

Yes

Interest is taxable as savings income.

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16
Q

What is the minimum for Guaranteed Income Bonds?

A

£500

Same minimum requirement applies as with Growth Bonds.

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17
Q

Does a Guaranteed Income Bond pay monthly interest?

A

Yes

Monthly interest is paid for three years at a fixed rate.

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18
Q

Is Guaranteed Income Bond interest taxable?

A

Yes

It is taxable as savings income for all tax years including 2025/26.

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19
Q

Do Direct ISAs pay tax-free interest?

A

Yes

Interest is credited tax free annually on 5 April.

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20
Q

What is the minimum age for a Direct Saver account?

A

16

This account is available to individuals aged 16 or over.

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21
Q

Is interest from a Direct Saver taxable?

A

Yes

Interest is paid gross, but taxed as savings income.

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22
Q

What is the minimum balance for a Direct Saver account?

A

£1

NS&I requires at least £1 to hold the account.

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23
Q

What is the maximum balance for a Direct Saver account?

A

£2 million, or £4 million joint

These limits apply per account and remain unchanged.

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24
Q

Can withdrawals be made from a Direct Saver without penalties?

A

Yes

There are no withdrawal restrictions.

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25
What is the **minimum amount** for an NS&I Investment Account?
£20 ## Footnote This account can also be opened for a child under 16.
26
Is interest on an NS&I Investment Account **taxable**?
Yes ## Footnote Interest is paid gross but taxable as savings income.
27
Are NS&I **Savings Certificates** available to new customers?
No ## Footnote They are closed to new purchases.
28
What is the **maximum holding** for Savings Certificates per issue?
£15,000 ## Footnote The limit applies per individual per issue.
29
Are NS&I Savings Certificates **tax free**?
Yes ## Footnote Both fixed interest and index-linked issues are free from Income Tax.
30
Are individuals liable to **CGT on gilts**?
No ## Footnote Gilts are exempt from CGT; unchanged for 2025/26.
31
Are **CGT losses** allowable on gilts?
No ## Footnote Losses on gilt disposals cannot be claimed for tax purposes.
32
Is income from **gilts taxable**?
Yes ## Footnote Interest is taxable as savings income, though paid gross.
33
Can investors elect to have **gilt interest taxed** at source?
Yes ## Footnote They may choose for 20% tax to be deducted.
34
How often is interest paid on **gilts**?
Twice yearly ## Footnote Gilts pay fixed coupons semi-annually.
35
Are **corporate bond disposals CGT-exempt** when qualifying?
Yes ## Footnote Qualifying corporate bonds are exempt from CGT.
36
Is interest from **corporate bonds taxable**?
Yes ## Footnote Interest is taxable as savings income.
37
What qualifies a **discounted security**?
Issued at a price at least 15% below redemption value ## Footnote Relevant discounted securities are exempt from CGT.
38
Are **local authority bonds CGT-exempt**?
Yes ## Footnote They are treated as qualifying corporate bonds.
39
When does **property income get taxed**?
In the tax year profits arise ## Footnote The accruals basis applies unless rules for cash basis apply.
40
Are UK property income streams **pooled**?
Yes ## Footnote All UK property income is combined into one property business.
41
Are overseas property income streams taxed **separately**?
Yes ## Footnote UK and overseas property businesses are kept distinct.
42
When can a landlord use the **cash basis** for property income?
If rental income before expenses is £150,000 or less ## Footnote They may opt out; unchanged for 2025/26.
43
What is the **property allowance amount**?
£1,000 ## Footnote If income is below £1,000, it need not be declared.
44
Is property income treated as **relevant earnings**?
No ## Footnote Except for furnished holiday lettings.
45
Can property losses be **carried forward**?
Yes ## Footnote They can offset future property rental profits.
46
Can property losses **offset other income**?
No ## Footnote They cannot be used against employment or trading income.
47
Is disposal of let property subject to **CGT**?
Yes ## Footnote Gains on sale are chargeable unless specific relief applies.
48
What qualifies letting income as **property trading income**?
Providing substantial services to tenants ## Footnote This is treated as a trade, not investment income.
49
What is an **advantage of property trading income**?
Loss relief is more flexible ## Footnote Trading losses may offset other income.
50
Are property trading profits **relevant earnings** for pension contributions?
Yes ## Footnote This allows higher contribution limits.
51
Can property traders claim **rollover or holdover relief**?
Yes ## Footnote These CGT reliefs apply to trading assets.
52
Are repairs and maintenance **allowable property expenses**?
Yes ## Footnote Only repairs, not improvements, are deductible.
53
Are alterations or improvements **deductible**?
No ## Footnote They are capital enhancements, not revenue expenses.
54
Is loan interest **deductible for residential property**?
Partially ## Footnote Finance costs only give a basic-rate 20% tax reduction.
55
Is loan interest **fully deductible for commercial property**?
Yes ## Footnote Restrictions do not apply to commercial or FHL property.
56
Are legal fees for renewing **short leases deductible**?
Yes ## Footnote They count as allowable expenses.
57
Are professional charges for **rent collection deductible**?
Yes ## Footnote Running costs are allowable.
58
Are buildings insurance, water rates, and council tax **deductible** if the landlord pays?
Yes ## Footnote These qualify as wholly and exclusively incurred expenses.
59
Are cleaning and service costs **deductible**?
Yes ## Footnote Expenses for maintaining the property are allowable.
60
Are **capital allowances available on residential lets**?
No ## Footnote They apply only to commercial properties.
61
Are plant and machinery allowances available for **commercial lets**?
Yes ## Footnote Equipment used in the business is eligible.
62
What is the **Annual Investment Allowance limit**?
£1 million ## Footnote The AIA remains £1 million for 2025/26.
63
What writing-down allowance applies **above the AIA limit**?
18% ## Footnote Standard main pool rate applies.
64
What does **replacement of domestic items relief** cover?
Cost of replacing furnishings ## Footnote Deductible amount = replacement cost + disposal costs – proceeds.
65
When is a **lease premium treated as rent**?
If the lease is under 50 years ## Footnote The premium becomes taxable as property income.
66
How is **taxable premium calculated**?
Premium minus 1/50th for each year other than the first ## Footnote This reduces taxable amount proportionally.
67
What is a **reverse premium**?
A payment from landlord to tenant to take a lease ## Footnote Reverse premiums are taxable on the tenant.
68
Is a **premium deductible for the landlord**?
No ## Footnote It is not deductible from income but is allowable as CGT enhancement on disposal.
69
Is the **main residence exempt from CGT**?
Yes ## Footnote Owner-occupied homes are generally exempt.
70
Is a let part of the home **exempt from CGT**?
No ## Footnote Let areas do not qualify for full private residence relief.
71
When does **special letting relief apply**?
Shared occupancy with the tenant ## Footnote Applies when landlord lives in the same home.
72
What is the **maximum letting relief available**?
£40,000 per person ## Footnote Each owner may claim up to £40,000.
73
What is another limit for **letting relief**?
The amount exempt under main residence relief ## Footnote Relief caps at the lowest of the three measures.
74
What is the **third limit for letting relief**?
The gain attributable to letting ## Footnote Ensures relief does not exceed letting-related gain.
75
Is **rent-a-room income tax free** up to a limit?
Yes ## Footnote Up to £7,500 tax free.
76
Must rent-a-room accommodation be **furnished**?
Yes ## Footnote Relief applies only to furnished accommodation.
77
Is rent-a-room relief available for **whole-property letting**?
No ## Footnote You must live in the residence.
78
What happens if rent exceeds **£7,500**?
Landlord chooses between normal basis or excess-over-£7,500 basis ## Footnote No expenses allowed under the latter method.
79
Must rent-a-room accommodation be **residential**?
Yes ## Footnote It must be used as living accommodation.
80
How many days must an **FHL be available to let**?
210 days ## Footnote This is the availability test.
81
How many days must an **FHL actually be let commercially**?
105 days ## Footnote The letting test determines qualification.
82
What is the **maximum number of days for long-term lets**?
155 days of periods over 31 days ## Footnote Exceeding this disqualifies the property.
83
Can **FHL income be used for pension contributions**?
Yes ## Footnote FHL profits count as relevant earnings.
84
Which **CGT reliefs apply to FHLs**?
Rollover relief, holdover relief, BADR ## Footnote FHLs receive favourable business asset treatment.
85
What are **FHL CGT rates** if not qualifying?
18% and 24% ## Footnote These rates apply for disposals after 30 October 2024.
86
When are **FHL tax advantages being abolished**?
6 April 2025 ## Footnote The regime ends from the 2025/26 tax year.
R03 25/26 (Key Points)
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