Investments
ISA’s
and
PEP's
ISA’s
Individual Savings Accounts (ISA’s) were introduced by the
current Government in the 1999/2000 tax year to replace the PEP
and TESSA products established under the Conservatives. The PEP
principles of tax-free growth were retained for ISA’s, as was the tax-free
interest offered by TESSA’s on deposit accounts. However, ISA’s
should not be seen as a continuation of PEP’s and TESSA’s. ISA’s
were introduced by the Government to encourage people to put money
aside for the future.
Subject to specific limits you can split your ISA between 2
different components. Within the shelter, all returns will be free
of income tax and CGT and you may withdraw your investment at any
time without loss of tax relief. As the tax benefits are so good
the Government has put a limit on the amount you can save in each
tax year.
So, not only do you have the flexibility to invest tax efficiently
in 2 different ways, when you invest in the stock and shares
component, you can now choose from a wider range of global funds
than previously allowed through PEP investment including property, gilt, bond and fixed interest funds.
Investors must be over 16 for the cash component and 18 for the stocks and shares. When you invest in an ISA you have a choice of investing
in a Maxi ISA or a Mini ISA.
Maxi ISA
A Maxi ISA allows you to invest up to £7,000
in any tax year. The maximum you can invest in
each component is:
Cash – up to £3000
Stocks and shares – up to £7000
Mini ISA
A Mini ISA allows you to divide your investment between
two different ISA managers. So you could decide to invest in
stocks and shares with one manager and a cash component with
another. The maximum you can invest in
each is:
Cash – up to £3000
Stocks and shares – up to £4000
It is important to remember that you cannot invest in a Maxi
ISA and a Mini ISA in the same tax year.
The principle benefit of investing in an ISA is that there is no
CGT to pay on any investments within the ISA and no personal
liability on income tax, even if you are a high rate taxpayer.
From
April 2004, dividends will be fully taxable, although there will be no further tax liabilities, even
for higher rate taxpayers. However, investments in corporate bonds
and gilts are free from tax and the provider is able to reclaim
the full 20% tax credit. Income taken from an ISA is totally free from income tax even for a higher rate tax payer.
PEP’s
Although Personal Equity Plans (PEP’s) can no longer be
bought by new investors, there are still many investors who hold
PEP’s which they invested in over the late 1980’s and 1990’s.
So, even though PEP’s may be seen as ‘old news’, many people have
built up and retained substantial PEP portfolios. Because of this
existing PEP’s should be regularly reviewed to ensure they are
meeting investor’s requirements. In addition your PEP and ISA units can be re-registered on a fund platform. This means that you can retain all the tax benefits and the same number of units but only need to refer to one place for valuations and investment administration.
TRANSFERRING FROM ONE MANAGER TO ANOTHER DOES NOT IN ANY WAY
AFFECT THE FAVOURABLE TAX STATUS THAT THESE INVESTMENTS ENJOY AND CAN BE EASILY ADMINISTERED BY USING A FUND PLATFORM - ASK FOR FULL DETAILS
We offer an extremely competitive service, so for more information
regarding ISA's or PEP's contact us on:
Telephone: 0115
945 5199 Fax: 0115 982 6250
Between
8.30am and 5.30pm Monday to Friday to discuss your requirements.
E.mail:
info@davidburnell.co.uk
and we will find a cost
effective solution for you.
Mortgages:
Interest Only
-
Pension
-
Repayment
-
ISA
-
Flexible
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David
Burnell Financial Services Ltd
1 Albert Road, West Bridgford, Nottingham, NG2 5GS
Tel: 0115 945 5199
Fax: 0115 982 6250
Email:
info@davidburnell.co.uk
David Burnell Financial Services Limited is an appointed representative of IN Partnership the trading name of the On-Line Partnership Limited which is authorised and regulated by the Financial Services Authority.
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