Financial Advisers Individual Savings Account (ISA) Guide
The UK government introduced ISA’s on 6th April 1999 replacing the personal equity plan (PEP) and tax exempt special savings accounts. The maximum annual amount per individual per tax year is £20000.
High Net Worth
The relevant types to HNW are arguably Cash and Stocks and Shares (Equites) and Innovative finance (IFISA). Cash ISA are essentially cash based accounts,. Therefore suitable for an emergency cash fund and short-term investment. The disadvantage of these is that the rate of return is lower than the level of inflation.Therefore the buying power of the money is decreasing in real terms.
The advantages are that they are a low risk investment and the there is no CGT or income tax payable. HNWI should also utilize their spouses / partner income for Stocks and Shares. ISAs allow investors to purchase shares, listed on a recognized global stock exchange. Also units in UK unit trusts and open ended investment companies. They are suitable for growth or income investment strategies. However, the investor should have the capacity for loss if the underlying investments fall in value.
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