Individual Savings Account (ISA)

Introduction

ISAs were created in 1999, succeeding their predecessor the Personal Equity Plan (PEP).

Individuals can save up to £20,000 in each tax year, which can now include contributions into both a Cash ISA and a Stocks and Shares in the same tax year. There are now five ISA varieties, which are described in more details in the Key Guide – Making the most of ISAs in the link opposite.

ISAs are highly tax efficient investments, as they allow individuals to avoid capital gains tax on the compound growth within the ISA over the duration of the investment.

An individual who invested the full £20,000 ISA allowance in each tax year for say, 30 years, assuming an annual return of 6% net of fees, would have a tax-free ISA fund of £1,676,033 at the end of the term.

This fund would be available for withdrawal without capital gains tax applying. This could be used for example, to pay off a mortgage immediately prior retirement.

If the individual wanted to supplement their income in retirement, assuming an income yield of say, 4% per annum, tax-free income of circa £67,000 per annum would be payable.

As the above illustration demonstrates, ISAs can form a very substantial additional retirement planning pool.

Most of Rosan Helmsley’s clients hold their Stocks and Shares ISA portfolios on a fund platform. Holding investments via a platform allows significant administration benefit and the ability to switch funds in a timely manner without fees applying.

Inevitably, investor’s preferences and circumstances change over time, and therefore the ability to switch investments on a cost-free basis offers a significant advantage.

Rosan Helmsley has negotiated preferential platform fees with one of the largest platform providers in the U.K. and we would be happy to discuss consolidating your existing ISAs on to this platform, where investors can benefit from these preferential charging rates.

Please contact us if you would like to discuss investing in ISAs.