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.

Business Property Relief (BPR)

ISAs are subject to IHT. However, by using Business Property Relief (BPR) through investing in the Alternative Investment Market (AIM). It provides IHT exemption and also tax-free income. and growth. This utilises all of the benefits of an ISA wrapper. To achieve this the companies need to be BPR qualifying. They also need to have been held for a minimum of 2 years after death.

Also they can be left to their beneficiaries free from any IHT liability. You can book a free financial and retirement planning review with one of our financial advisers.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.
Tax treatment varies according to individual circumstances and is subject to change.

Business Property Relief Schemes invest in assets that are high risk and can be difficult to sell such as shares in unlisted companies. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits. 

Speak to one of our highly qualified, professional financial advisers for a no-obligation financial planning review. 

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