ISA Question and Answers

• An ISA (Individual Savings Account) is a tax-efficient wrapper for certain eligible investments such as a cash account or equity-based investment funds.

• ISA's have no liability to Capital Gains tax (CGT) and Income tax whilst held. Their value on death, however, will be assessed for Inheritance tax (IHT) purposes, being included in the value of your Estate.

• From April 6th 2008 the limit will be £7,200, of which £3,600 can be invested into a Cash ISA. Alternatively, the full £7,200 can be invested into an Equity/Managed Fund ISA, should this be preferred. The 'Mini' and Maxi' ISA distinctions (and PEPs) will be removed.

• Shares, Unit Trust funds, Investment Trust funds, Open-Ended Investment Company funds (OEIC's), Cash.

• Online: Individual fund managers tend to have their own websites and 'Fund Supermarket' websites offer many funds from different Fund managers under one roof.
• IFA: An Independent Financial Adviser will be able to assess your attitude to risk and recommend a portfolio of funds to suit your needs and objectives.
• Comparative tables: Again, these can be found on websites or in newspapers. They can be particularly effective when seeking a praise of the best available Cash ISA rates.

• Most actively-managed ISA's have two charges: Initial and Annual. The Initial charge covers the cost of buying the units and the provider administering the trade and setting up your account with them (it may help pay commission to an Intermediary/Adviser too). The Annual Management Charge (AMC) covers the cost of the ongoing fund management and administration, usually taken by the monthly cancellation of some of the 'units' held in your investment. Fund Supermarkets or Discount Brokers may be able to negate some of the charges, especially the Initial charge, due to the volume of business they transact.

• Adviser: A Bank or Independent Financial Adviser (IFA) will recommend a portfolio of investment funds for you in direct relation to your attitude to risk. It is always wise to check the Adviser's status i.e. a Bank Adviser may only be able to advise from one company's investment funds, when there are many, many more available in the market.
• Fund Supermarkets: Usually low cost, these providers have many, sometimes over 1,000, funds available to purchase. Discounts can be found on some funds due to the purchasing power of the Funds Supermarket itself as a result of the sheer volume of business they place with all Fund managers. Research tools and fact-sheets are usually available to help you make decisions.
• Direct: Fund managers usually have a way to purchase direct from them, should you be confident in your choices. Some will only allow purchases through an Independent Financial Adviser.

Tax Summary Tables