1
Q
shares in listed companies
A
- 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
2
Q
tax on shares is listed companies
A
- corporation tax on capital gain and rental income
3
Q
main feature of property of unit trust/investment trust
A
- 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
4
Q
what are the taxes s on property in unit trusts
A
there is no Corporation tax within the funds. The investor pays CGt when a chargeable event occurs and they have used their exempt amount
5
Q
How to qualify as a PAIF
A
- 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
6
Q
what is the tax on a PaIF in the fund
A
- 20% corporation tax on income that is not rent
- all rent is tax free
7
Q
what is the tax paid by investor on PIAF
A
- 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
8
Q
property in life assurance what is it and how is it tax
A
- 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)
9
Q
what’s a REIT, Who’s it aimed at and what makes it one
A
- 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
10
Q
tax on REITs - Which parts are Exempt
A
- 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
11
Q
What is the Tax Treatment of REUT for an investor
A
- 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
12
Q
please explain the enterprise investment scheme and income tax
A
- 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
13
Q
explain Cgt and Enterprise investment scheme
A
- 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
14
Q
explain Conditions for enterprise Investjebt Scheme
A
- 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
15
Q
Seed Enterpruse investment Schene
A
- 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
16
Q
VT
A
- 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
17
Q
conditions to qualify as a venture capital trust
A
- on London Stock Exchan
- all money must be raised in two years
- 80% must be from qualifying
- no more than 15% of total investment must be invested in any single company or group
- 70% of qualifying holdings must be ordinary shares that have no preferential rights
- at least 10% of the total value of investment in a company must be in non preference
- fewer than 250
- no more than 5 million or 10
- 12 / 20 in lifetime
benefiting from renewable energy are excluded
investments in vcts that are conditionally linked in any way to a share buyback or that have been made within six months of a disposal of shares in the same vct, are excluded from qualifying for new tax relief.
from april 2014 vcts are prevented from returning capital that does not relate to profits on investments within three years of the end of the accounting period in which shares were not issued
Investment must be made within seven years of the company’s first commercial sale. although this rule does not apply where the investment repeats more than 50% of turnover averaged over the previous five years
18
Q
VCt tax
A
- realised gains are distributed to investors via dividend. Gains arising within VCT are exempt from corporation
19
Q
calaculatinh gain on an oeic
A
get the gain and take the 3,000.00
then times the amount bu 24% or 18%
this is the tax payable
there is always a CGT gain on this
- rental income is taxed by 20% in fund there is no corporation tax on gain in fund
20
Q
shares within gilts limit amount
A
- can only be within one fund up to 30% of fund
21
Q
non reporting and reporting
A
- basic rate tax payers better of in non reporting
- non reporting don’t allow deferrals for CGt
- for non reporting the highest higher rate would pay is 40%
- most prefer reporting as its usual rules and can defer gain
22
Q
ETf
A
- subject to broker fees but no stamp duty
- use OTC swaps for synthetic
- income tax on dividends and CGT on gains
23
Q
exchange traded note
A
- they are risker than exchange traded funds
- they don’t own anything they are unsecure bonds issued by banks.
- it’s a bond that does not pay interest but linked to market index
- they use derivatives to track index
- subject to downgrade
24
Q
derivative
A
-exchange traded - stock exchanges sell them
- OTC sold directly to investors
- NYsE sells them
- future is legally binding agreement to buy or sell soemtbing
- buyers if futures are long position ( they have an obligation to buy it)
- sellers have a short position - obliged to sell
25
what is the future / options and whose got positions
- future obligation option is not
- long they are buying
- short selling
26
call / put
- a call is right to buy
- a put is the right to sell
27
taxing derivative
- all though CGT but if trader then it's income
- a call ( treated as additional cost to buy)
- a put ( this can be deducted
- of option is worthless can be tested as a disposal for CGT
28
what are the two main uses for futures and options
- hedging
- speculation
29
VCT tax on investor
- 30% £200,000
- no CGT no min
30
fixed floating charges - expplain
fixed - denture fixed against something like land that can't be used
floating - this is not slowly for the debtor
31
what are floating rate notes
these are bonds issued by companies that pay a rate of interest that is not fixed but linked to a money market rate
- SONIA a this is every quarter
sonia plus 50 would be 0.50
32
globalisation
- there is growth in manufacture and export
33
what is current account
transactions in visible goods and invisible goods
34
what is capital count
-movement of money in and out of the country ie currencies gold imf - not exports
35
M0
- currencies - increase in this shows consumer spending boyant
36
M4
money and loans - increase in this is build up inflation
37
explain in the money for call and put
- call in money if the strike is below market price
- pit is in money if strike is above market
38
unit trusts
- taxes at 20% on dividend and rental income
- subject to cgt outside of the fund
- investor pays dividend rates if 60% are in assets
investment
flashcards
Decks in class (13)
# Cards
