If you sell an investment for more than you have paid for
it, the profit you make is called a capital gain. CGT is the tax payable when
a capital asset is sold or given away and a gain or profit has been made.
Country of Domicile
The country of a person's permanent home as opposed
to that person's nationality or temporary place of residence. Fund Manager
Someone who invests money and manages a portfolio of investments
such as unit trusts and investment trusts. Independent Financial Adviser (IFA)
Advisers who are independent and are
not limited to advising on the products of a particular company. Inheritance Tax
The death duties which replaced capital transfer tax in
the 1986 Finance Act. The change abolished tax in most cases for lifetime
gifts and created 'potentially exempt transfers'. The situation on death
remains
that all assets owned are chargeable subject to a nil-band and certain
exemptions. Non-Resident
An individual who is not resident in the UK will usually only
be liable to UK income tax on income which arises in the UK. Offshore Investment Bond
This is an investment bond that is made with an
insurance company operating outside the UK. Generally, the underlying investments
accumulate with little or no taxation so that all taxation can be deferred
until the bond is encashed. Stock Market
Where stocks and shares are bought and sold. Unit Linked
Your contributions buy units in the selected fund. The value
of the units depends on the underlying assets in the fund. Consequently
the value of your fund can go down or up. There is a wide range of funds
to choose
from: some are relatively low risk and others can be very speculative. With Profit
At the end of each year the company declares the reversionary
bonuses (also known as 'regular' or 'annual'). These bonuses
are added
to the value of the fund and once added, cannot be taken away -
although the product provider will usually reserve the right to apply
a 'Market Value Adjuster'. Reversionary bonuses are guaranteed
to be
paid in
full on the contractual maturity date. A Market Value Adjuster
(also known as 'Market Level Adjuster' or 'Market Value Reduction')
is
a type of penalty applied on early encashment. It is usually
applied when the stock market is falling or fluctuating rapidly.
The idea
is to ensure the surrender value received is not unrealistic
when compared with the underlying assets of the fund. A further
bonus
may be paid on the contractual maturity date or on a death claim.
This is called the 'terminal' or 'final' bonus. A factsheet (pdf
file, 105kb) on with profit policies can be found on the FSA
Consumer Help website. <back>
Hedgelands Financial Services Ltd, Hedgelands, Abbotskerswell, Newton
Abbot, TQ12 5PW
