A regular review of all investment funds is important. A very considerable number of funds are available. Independent Financial Advice is recommended to ensure the correct portfolio of funds is selected commensurate with your attitude to investment risk and reward and any income requirements.

Individual Savings Accounts (ISA)

ISAs became available for investment in April 1999. The current maximum contribution for each individual in each tax year is £10,200 for a Stocks & Shares ISA of which £5,100 could be invested in a cash ISA. Proceeds from ISA’s are free of UK Capital Gains Tax and UK Income Tax.

Since April 6th 2004, the tax on dividend income in respect of ISA’s invested in equity funds is no longer reclaimable by the fund manager. Income from gilts and corporate bonds remains free of tax within the fund and to the investor.

Unit Trusts, Investment Trusts and OEICs

These investments do not enjoy the tax privileges when not invested within an ISA wrapper. However, there is generally much greater scope for investing larger sums. Proceeds from these investments are potentially subject to UK Capital Gains Tax after the allowance for reliefs and exemptions. Income paid to the investor is subject to income tax at the investor’s highest marginal rate.

Investment Bonds

Investment Bonds are single premium whole of life policies available from the majority of insurance companies. These contracts access managed and specialist funds and are invested in for the purposes of capital growth and possibly income.

Investors have the option to invest in ‘Onshore’ investment bonds available from UK insurance companies or ‘Offshore’ bonds available from non-UK insurance companies based in locations such as the Isle of Man and Dublin. Investment bonds can be used for important financial planning strategies such as Inheritance Tax mitigation.

Different rules exist regarding the taxation of Onshore and Offshore investment bonds. Independent Financial Advice is recommended to ensure the correct investment is selected commensurate to your attitude to investment risk, any income requirements and tax status.

Wrap Platforms

In recent years, fund ‘supermarkets’ and now Wrap Platforms have become increasingly popular. These arrangements are offered by investment companies and significantly reduce the administration and cost of managing an investment portfolio.
Typically, investors can arrange their investments in Pensions, ISAs, Unit Trusts, Investment Trusts, and OEICs and Investment Bonds using just one administration platform. The provider offers access to the funds of a wide range other investment and insurance companies to provide as much choice as possible. Investors can typically view their accounts via the internet to obtain ‘real time’ valuations.


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