CF5 Advice

Aegis

Cashmeister27 wrote: »

Hello,

I am about to take CF5, and need a grey area clarifying. In the questions for part 2 of the exam, all the Unit Trust and OEICS for Income funds are paid net with out taking off the 10% tax credit, or is it assumed that this has already been paid in the fund before and therefore no further tax is due for a Basic Rate Tax Payer?



Any help is greatly appreciated.

It's a written exam, so state your assumptions clearly and you'll get the marks if they've failed to specify either way. If you're not told otherwise, it's probably safest to assume that the income is paid net of tax deducted at source/tax credit, as they're likely to want to see the grossing up calculation.

stu1234567

Hi

I am due to sit cf5 on Tuesday-eek!! Just wondering if answers have to match their points to get the marks?
Also does anyone have any tips on justifying why you chose a product& know where I can find risk ratings for the funds?
Read all books again made notes, recogise everything I read but still cannot recall it all to put it down on paper, anyone got a list of what always to consider when discribing/comparing products?
Any help would be much appreciated:)

Aegis

stu1234567 wrote: »

Hi

I am due to sit cf5 on Tuesday-eek!! Just wondering if answers have to match their points to get the marks?
Also does anyone have any tips on justifying why you chose a product& know where I can find risk ratings for the funds?

Charges, accessibility, flexibility of investment choice (including the ability to managed risk), favourable taxation.

Risk ratings are going to be too much depth for CF5, in all likelihood. Just remember that the risk scale goes cash, fixed interest, property/equity funds, direct property/equities/commodities, specialist funds, VCTs/EISs and you should be more or less ok as far as risk goes.

stu1234567

Thank you. It will hopefully all come clear when I go through the case studies again. I've concentrated on learning the 3books(2,3,4)and summarising them, now need to redo case studies and learn what product applies to what person, hoping I will fit it all in, bye bye weekend!

stu1234567

Hi just a quick question about pensions. Just wondered if anyone knows for the two methods (relief at source&net pay) whether the contibution is paid net or gross& how they get tax back there tax-for basic rate tax payers&higher rate tax payers? It's so confusing. Thanks

Mr_h

stu1234567 wrote: »

Hi

I am due to sit cf5 on Tuesday-eek!! Just wondering if answers have to match their points to get the marks?
Also does anyone have any tips on justifying why you chose a product& know where I can find risk ratings for the funds?
Read all books again made notes, recogise everything I read but still cannot recall it all to put it down on paper, anyone got a list of what always to consider when discribing/comparing products?
Any help would be much appreciated:)

Hi

I'm also due to sit the cf5 exam this Tuesday.

I'll prob do the Portfolio question first, since from other people's feedback this is considered to be the trickier of the two. I don't have an Investment background, but I've used the case study in the CF5 study text, as well as past papers to try and get a feel for what the examiners are after.

You can access 3 past papers for free through the cii's web-site .I wasn't allowed to post the direct link on here

Also, if you register on the CF5's web-site Revsion mate there are some quiz's you can do that test your knowledge of each chapter.

Hope this helps, and good luck

Aegis

stu1234567 wrote: »

Hi just a quick question about pensions. Just wondered if anyone knows for the two methods (relief at source&net pay) whether the contibution is paid net or gross& how they get tax back there tax-for basic rate tax payers&higher rate tax payers? It's so confusing. Thanks

Relief at source:

Contribution is paid net of basic rate tax. The basic rate tax is then reclaimed by the pension provider and paid directly into the policy. Higher rate tax relief is claimed back from HMRC by the contributor.

Net Pay:

Contribution is paid gross from salary, no reliefs need to be claimed.

jem16

Aegis wrote: »

Relief at source:

Contribution is paid net of basic rate tax. The basic rate tax is then reclaimed by the pension provider and paid directly into the policy. Higher rate tax relief is claimed back from HMRC by the contributor.

Net Pay:

Contribution is paid gross from salary, no reliefs need to be claimed.

Shouldn't that be the other way round?

Relief at source - contribution from gross pay.

Net Pay - paid net of basic rate tax, higher rate tax claimed by contributor.

Aegis

jem16 wrote: »

Shouldn't that be the other way round?

Relief at source - contribution from gross pay.

Net Pay - paid net of basic rate tax, higher rate tax claimed by contributor.

Bizarrely enough, no. A "net pay arrangement" is another term for a salary sacrifice arrangement, so the contribution is made gross, from gross salary. Relief at source refers to the basic rate tax reclaim made by the pension provider.

Pension terminology is a nightmare at times!

jem16

Aegis wrote: »

Pension terminology is a nightmare at times!

Too true!

I always thought it was the other way around and certainly I've seen it used the other way in the tax board. Makes more sense to me that way too.

However a quick google shows you are correct.

Learn something new every day.