Individual Savings Accounts
You can use this site to
buy an ISA on line
Click here to buy an Individual Savings
Account. If you prefer to take advice and buy
from us in the normal way
please email us or use the
call back facility and one of our advisors
will be in touch shortly.
If you have made your own choice
of fund manager and don't need our advice but
would like to purchase the fund at a discount on
an 'execution only' basis,
email us with your requirements and we will
send you details of the discounts we can apply
to your chosen fund along with the key features
document and application form for your chosen
ISA fund.
Once you have bought your ISA
you can return to this page to manage your
portfolio just
click here, login and access your account.
Frequently
asked questions about ISA's
What is an
ISA?
Which
products can be held inside an ISA?
What are
Mini & Maxi ISAs?
ISA
switches and transfers?
What are
the tax benefits of ISAs?
What
will happen to PEPs and TESSAs?
Other differences between PEPs and ISAs
Summary
What is an
ISA?
Individual Savings Accounts
(ISAs) are a new type of tax-efficient
investment which will replaced PEPs and TESSAs.
Like a PEP, an ISA is a wrapper
which gives your investments tax-free status;
you don’t pay any further income tax or capital
gains tax on the returns which your ISA
produces.
Unlike a PEP, you can also hold
cash and insurance products inside your ISA plus
a wider range of stockmarket based investments
that for PEPs.
The maximum you can invest in an
ISA is £7,000.
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questions
Which
products can be held inside an ISA?
You can invest in up to 3
different components within your ISA: Stocks and
Shares, Cash and Insurance. The chart below
shows the main types of investments which are,
in general terms, allowed in each component.
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questions
What are
Mini & Maxi ISAs?
A Maxi ISA is similar to a PEP
since your ISA is managed by just one Manager. A
Maxi ISA must include a stocks & shares
component, and may, but does not have to,
include the other components.
If you want to invest
your full £7,000 annual ISA allowance in a
stocks & shares component you must invest in a
Maxi ISA.
A Mini ISA allows you to choose
a different ISA Manager for each of the three
components. If you chose a Mini ISA the maximum
you can invest in the stocks & shares component
is limited to £3,000 regardless of whether you
invest in a Mini cash or Mini Insurance ISA.
You cannot invest in a Maxi ISA
and a Mini ISA in the same tax year.
The table shows the subscription
limits for each of the ISA components:
* The amount you can invest in a stocks &
shares component inside a Maxi ISA depends on
how much of your total allowance is left after
any investments in cash or insurance. To invest
the maximum in stocks & shares you need to
invest in a Maxi ISA and purely into the stocks
& shares component.
In addition to the Maxi and Mini
ISAs, a TESSA only ISA which is for cash only,
lets you invest the capital from any maturing
TESSAs without it counting towards your annual
ISA allowance.
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questions
ISA
switches and transfers?
You are not able to switch
between different ISA components (e.g. between
cash ISAs and stocks and shares ISAs) or between
different types of ISA (Maxi and Mini).
You can transfer ISAs to a
different ISA Manager, but only if you transfer
into the same components of the same type of ISA
(Maxi or Mini) as your existing ISA Manager.
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questions
What are
the tax benefits of ISAs?
All your savings grow free of
any further income and capital gains tax
whatever your tax rate. In the case of dividends
from equity assets held within ISAs and PEPs a
10% tax credit will be reclaimed until April
2004, when the tax credit will be abolished. In
the case of interest distributions from
non-equity assets held within ISAs and PEPs,
income tax at the current rate of 20% will be
reclaimed by the ISA or PEP Manager.
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questions
What
will happen to PEPs and TESSAs?
You won’t be able to open a new
PEP or add to an exisiting PEP after 5 April
1999. However, existing PEPs continue and will
benefit from the same tax benefits as ISAs. You
will be able to reinvest income and transfer
PEPs between different PEP providers.
For TESSAs you won’t be able to
start a new one after 5 April 1999. Any existing
TESSAs can continue until the end of their 5
year life. Once a TESSA matures you have six
months to transfer the capital only into the
cash component of a Maxi ISA, Mini ISA or a
TESSA Only ISA without it counting towards your
annual ISA limit.
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questions
Other differences between PEPs and ISAs
Whilst PEPs and ISAs share many
similarities, there are a few differences other
than the amount you can invest and what you can
invest in, which are worth being aware of:
- Subscriptions on behalf of
othersUnlike PEPs it is possible to
subscribe on behalf of someone else, for
example if you are making a gift to someone,
although the basic premise that a
subscription must be in the investors’ own
cash remains.
- 10 year guaranteeThe annual
Budget speculation about possible changes to
PEPs should be reduced with ISAs, because
the Government has guaranteed that ISAs will
run for at least ten years with a review
after seven.
- CAT standardsCAT standards
are the voluntary benchmark for ISAs by
which the Government hopes to encourage many
new investors to save more.
Many investment companies have
chosen not to offer a CAT standard stocks &
shares ISA. This is because they feel that the
CAT standard might be interpreted as a
Government endorsement and mislead potential
investors.
Many of these companies welcome
them for straightforward cash and insurance
ISAs, but do not feel CAT standards are
appropriate for stocks & shares. They believe
that it is dangerous for the Government to imply
that a stocks & shares ISA may be suitable for
the first time investor simply because it
carries a CAT mark.
Like all stockmarket investments
the value of CAT standard stocks and shares ISAs
will rise and fall. However, depending on the
portfolio of the particular ISA they could have
very different risk profiles. Under the rules
for CAT standards, it is quite possible to offer
a higher risk specialist fund and a much lower
risk bond fund, both of which qualify for a CAT
standard.
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questions
Summary
Our overall view on ISAs is that
they will be popular primarily because of their
similarities to PEPs rather than the addition of
the cash and insurance elements. In fact the
potential for investors to be confused,
particularly in the early years of ISAs, is
high.
We believe that most investors
will continue to want to maximise their returns
over the long term by holding a diversified
spread of shares. Unit trusts are the perfect
vehicle for this.
Email us with your requirements and we will
send you the key features document and
application form for your chosen ISA investment
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questions
© 2007 Pall Mall
Financial Independence Ltd
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