R07, R06, AF5 and the Personal Savings Allowance

Posted May 11, 2016

This update covers:

1. R07 Advanced mortgage advice - Gap Analysis and Assessment Tool
2. Expected solution packages for R06 and AF5 - start preparing now
Tax free interest - the Personal Savings Allowance

1. R07 Advanced mortgage advice - Gap Analysis and Assessment Tool
We have now added a R07 assessment tool to our range of training modules. This tool is designed to provide you with exam standard questions and answers delivered online in an environment similar to the real computer based exam. It includes numerous additional features to assist you with your revision and exam preparation.

There are 2 parts to this package, 16 case studies each comprising 5 multiple-choice questions AND a bank of 220 multiple-choice questions.

Assessment details
You can chose from these assessment types:

  • 25 or 50 questions delivered in revision style
  • 25 or 50 questions delivered in exam style

Revision style allows you to view the answer after every question. With the exam style you complete all the questions in the same manner as you do in the actual exam.

Both styles include all these features:

  • Total marks scored and percentage
  • Marks and percentage scored for each learning outcome
  • Questions you answered incorrectly along with the correct answer are detailed against each learning outcome
  • Ability to print the results report detailing the above information
  • Your average marks are benchmarked against others using this module
  • Your statistics and study time are included on your personalised learning log/CPD certificate - you can view and print this at any time.
Try our 5 question revision style demo J10 gap analysis
Access is provided for 6 months and includes syllabus updates. If you purchase multiple training modules a discount is available along with a longer access period. Note that we don't offer a text based online course for J12, students would normally purchase the CII's textbook and use our assessment package to assist with their exam revision.

Provided FREE when you purchase any training module. Included are 5 online courses covering learning skills on: time management, exams, study, reading & memory.

J10 assessments

2. Expected solution packages for R06 and AF5 - start preparing now
Purchase your expected solution package now and get access to many features to start preparing for the exam in advance of our expected solution being issued 7 days before the exam date. We will be covering all exam dates including the R06 July 2016 exam and the R06 and AF5 exams in October.

The Expected Solution Packages offers MORE than any other training provider:

  1. Technical content for research
  2. Exam technique with access to past expected solutions and mock exams
  3. An online advice skills course

It’s a no brainer!

See our expected solution packages page here for more details.

3. Tax free interest - the Personal Savings Allowance
In this article we cover the recent changes to the taxation of savings income. This is one of many developments that advisers should have picked up through their CPD activities over the last few months as part of the regulatory requirement to maintain up to date diploma level knowledge.

Tax free interest - the Personal Savings Allowance
The new tax year saw significant changes to the taxation of savings with the introduction of the Personal Savings Allowance (PSA).

The next time a bank, building society, NS&I or other deposit-taker adds interest to a deposit account, it will be without the deduction of basic rate tax. Some NS&I products already paid interest gross prior to the change, but now they will be able to do the same with the rest of their products.

Under the new rules, interest is still taxable in full for those in the additional rate (45%) income tax bracket - they do not get a PSA at all. Those that are in the higher rate (40%) bracket can earn up to £500 per year interest tax free, and those who pay basic rate tax (20%) can earn up to £1,000 per year tax free. Any interest received over these amounts is taxed and collected either through self-assessment or by HMRC collecting it through tax coding. The taxpayer doesn’t have to do anything - the coding will be done by HMRC via the bank or building society, and those already in self-assessment carry on as usual.

Savings income as defined under income tax legislation includes income received from deposit and savings accounts as mentioned already, but also includes interest distributions from authorised unit trusts and OEICs, gilts and corporate bonds, the income from purchased life annuities and gains from ‘certain contracts for life insurance’. It is interesting that this includes offshore bonds but NOT onshore bonds.

It is important to remember that the 0% starting rate still applies in some circumstances, and of course we still have ISAs of numerous types which are tax free. Neither of these use up any part of the PSA but income that is within the PSA does count towards the basic and higher rate limits.

Joe has earnings of £45,000 and receives interest from his building society account of £850. He has a personal allowance of £11,000 which, once deducted, means he is a higher rate taxpayer and is therefore entitled to a PSA of £500. Joe will not be taxed on the first £500 of his £850 interest, and the additional £350 of interest over the PSA will be taxed at 40%.

The point at which an individual pays higher rate tax for 2016/17 is when earnings exceed £43,000. So an individual with income of up to £43,000 is taxed at basic rate, and is entitled to £1,000 PSA. However, once the figure exceeds £43,000 (i.e. those with income £43,001 - £150,000), the PSA reduces to £500. The interest is added to earnings to establish this.

Going back to our example:

If Joe has earnings of £42,000 plus interest of £999 he is a basic rate taxpayer (as all income received falls within £43,000). He will receive a PSA of £1,000, and all his interest is tax free. However, if he earns £42,000 plus interest of £1,005, this pushes him into the higher rate tax bracket by £5. He will only get a £500 PSA, leaving the other £500 of interest taxed at 20% and the £5 taxed at 40%!


Wizard Learning Ltd

Provider of accredited online training and CPD system for financial advisers and financial services professionals.

We are committed to helping you gain higher level qualifications and maintain this knowledge through effective continuous professional development.

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