Lump Sum Allowance (LSA)
restricts the amount of tax-free lump sum payments the individual can take
from their pension over their lifetime and is currently
£268,275
Lifetime ISA
available to
those aged 18 and over but under 40.
The maximum that may be contributed is £4,000 per
annum up to age 50
The government will apply a bonus of 25% to any
money invested. The resulting fund may be used to fund a first home purchase or accessed in full as cash from the
age of 60.
Although no longer offered, existing help to buy ISAs
may continue to run until
30th November 2029, with
the bonus being claimed no later than 1st December
2030
Additional Permitted Subscription (APS)
allows them to receive a one-off enhancement to
their ISA allowance, up to the value of the inherited
ISA funds
Collective investments
pooled money is placed
in the hands of a fund manager who invests on behalf
of all the investors. This allows small investors to
benefit from a genuine spread of investments
Reporting funds
TAX IS DUE AS IT IS EARNED
CGT payable on gains but can utilise annual
CGT exemption
Non-Reporting funds
TAX DUE WHEN SHARES OR UNITS ARE SOLD
Gain calculated under CGT principles
but charge at income tax rates.
Traded Endowment Policies
policyholder sells the policy to a third party who takes over responsibility for maintaining premiums and then claims at maturity
Provided the policy has been running for more than 10
years or ¾ of the term (the shorter) no tax will be due
from the original policyholder. The person buying the policy will pay Capital Gains Tax
on maturity using the purchase price paid as acquisition cost and allowing for the premiums paid after purchase
as allowable deductions
Purchased life annuities
paid net of 20% income tax. This
means that basic rate taxpayers have no further income tax liability to pay, but higher and additional rate
taxpayers will have an additional 20% and 25% liability
respectively
Friendly society policies
Premiums paid annually do not exceed £270.
Premiums paid monthly do not exceed £25 per
month (equivalent of £300 per annum).
Enterprise Investment Schemes (EIS)
investment in a single, unlisted
company
Up to £1m (or £2m, where at least £1m is invested in
knowledge-intensive companies) may be invested each year
30% income tax relief as a tax reducer, based on the value of the initial investment.
if the EIS shares are disposed off
within three years income tax relief
will be clawed back by HMRC
deferral relief EIS
chargeable gain made on disposal of another asset is reinvested into EIS
shares, the gain on the disposed asset can be deferred until the point at which the EIS shares are sold
EIS shares qualify for
100% IHT Business Relief as long as they have been held for at least two years
seed Enterprise Investment Scheme (SEIS)
involves investing smaller unlisted company, with little or no track record.
Up to £200,000 per annum may be invested each year.
50% of reinvested gains are immediately exempt from CGT
Venture Capital Trusts (VCT)
investment is pooled and invested in a number of smaller companies providing diversification and reducing risk.
invest up to £200,000 per
annum and receive income tax relief of 30%. Tax relief is clawed back if the
shares are held for less than five years
VCTs tax
dividends are paid free of income tax and disposals of VCT shares are
exempt from CGT
Real estate investment trusts
75% of gross profits have to come from
letting property
Interest on borrowing must be at least 125%
At least 90% of rental profits must be paid to investors as a dividend within 12 months of the end of
the accounting period
Real estate investment trusts distributions will be split into two
elements
ring-fenced – income
generated from the part of the investment focused on property letting non-ring-fenced – income generated from the part of the investment
focused on additional property related services
Property Authorised Investment Funds (PAIFS)
At least 60% of the fund’s assets must be invested in property.
At least 60% of the income generated must come from property.
bare trust
involves giving up control of
assets and placing them in trust
for named beneficiaries
CGT is payable by the settlor on
transferring assets into the
trust.
PET for IHT purposes.
Bare Trust Income tax rates
responsibility for paying tax
falls on the beneficiary at their
rates
Interest In Possession Trust
CGT is payable by the settlor on
transferring assets into the trust Payable at the trustees rates of 24%..
CLT for IHT purposes.
Interest In Possession Trust Income
Tax
The responsibility for paying tax falls
on the trustees at the basic rate
(8.75%, or 20%).
Non-taxpayer beneficiaries can reclaim
this tax through self-assessment.
Higher/Additional rate taxpayers must
pay additional liability of 20%/25%
respectively through self-assessment
Discretionary Trust
The trust is flexible in that
beneficiaries can be added or
removed at any stage. CGT is payable by the settlor on transferring assets into the trust. CLT for IHT purposes
