Remember that an Isa is simply a tax wrapper that determines the taxation of what is held inside it. If you hold a poor fund, don’t blame the Isa tax wrapper, blame the person who put you in the bad fund, take advice and switch it without losing the Isa tax breaks.
You should always use an Isa before considering any other investment.
An Isa is simply a wrapper that allows that the gains made within the fund are free of tax. A cash ISA allows for cash to be held within a building society/bank and all gains to be available free of tax, irrespective of the tax position of the holder.
Within an ISA you can invest into most collective investments such as unit trusts/Oeics and corporate bonds. The fund choice will determine your returns but the Isa simply makes it free of UK capital gains tax.
For fixed interest ISA funds charges are important, as there is less fluctuation in the potential return. For an investment Isa (stocks and shares) expect to pay more for the best funds.
Isas were brought in by the Government in April 1999 to replace Tax Exempt Special Savings Accounts (TESSAs) and Personal Equity Plans (PEPs) and recent support by the government shows their commitment to the future of Isa as an investment option
In our opinion, choosing the best ISA relates solely to the performance of the Isa fund, assuming the Isa charge is neutral. Consider the Investment risk section as well as investment performance, Investment tips, and investment objectives before choosing your Isa.
If you have an existing Isa and you wish us to manage it for you, you can do so at the same cost as you are currently paying. Often we have access to the Isa funds much cheaper than you will have access at a retail level.
If you have a range of Isa funds and other Investments you may wish us to manage all your investments in one place under Worldwide wealth management. Read our section on Wrap Investment.
Find out why many people switch their Investment adviser to Worldwide Financial Planning by calling 0845 230 9876 or complete the enquiry form in confidence.
Worldwide Financial Planning – Investment Adviser of the Year, Ethical Investment Adviser of the Year
Isas under stakeholder arrangements
Isa stakeholder products have now become available. To earn the name 'stakeholder' the products have to meet conditions designed to ensure that the products are straightforward and good value. What is good value?
Basically there are five stakeholder products:
• Stakeholder deposit;
• Stakeholder medium-term investment product (MTIP);
• Smoothed MTIP;
• Stakeholder pension;
• Child trust fund stakeholder account.
Stakeholder deposit, MTIP and smoothed MTIP are available in both ISA and non-ISA versions.
Stakeholder Isas have now replaced CAT-standard ISA's, as from 6 April 2005. However, if you took out a CAT-standard ISA before that date, it will continue to meet the CAT standards. ('CAT' stands for fair Charges, easy Access and decent Terms)
Neither the stakeholder conditions nor the CAT standards guarantee the performance of the product. They do not mean that the government recommends that product or that the product is necessarily suitable for you. But they do provide a useful benchmark against which to compare other products.
The stakeholder conditions are as follows:
Cash Isas: Stakeholder deposit account
• There are no charges to pay on stakeholder cash Isas.
• The minimum deposit cannot be higher than £10.
• You can pay into the account in any of the following ways: cash, cheque, direct debit, standing order, BACS.
• You can make unlimited withdrawals.
• Withdrawals should be paid to you within seven days or less.
• The interest rate paid must be no less than 1% below the Bank of England base rate.
• If the Bank of England rate increases, the minimum interest rate must also increase within one month.
Stocks and shares Isas: Stakeholder medium-term investment products (MTIP)
• Annual charge limited to 1.5% of the fund during the first ten years and 1% thereafter.
• The minimum deposit cannot be higher than £20.
• No more than 60% of the fund is invested in riskier assets such as shares.
• You can pay into the account in any of the following ways: cheque, direct debit, standing order, BACS.
• The prices at which units or shares in the fund are bought and sold must be the same, and the price should be published daily.
Extra terms apply to the smoothed MTIP:
• Some of the return in good years is paid into a 'smoothing account' to be used to top up the return in bad years.
• If the smoothing account needs extra capital, policyholders can be charged extra.
• Managers must make available information about their policies on smoothing and charging.
• The whole with-profits fund and the whole smoothing account, apart from specific deductions allowed by law, are supposed to be for the benefit of policyholders.
Find out why many people switch their Investment adviser to Worldwide Financial Planning by calling 0845 230 9876 or complete the enquiry form in confidence.
Worldwide Financial Planning – Investment Adviser of the Year, Ethical investment Adviser of the Year
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