Frequently Asked Questions
ISA
Q. What is an ISA?
A. An ISA (Individual Savings Account) is a tax-privileged account introduced in 1999 to replace PEPs. ISAs were designed to encourage savings in a wider range of assets than PEPs - although Speirs & Jeffrey only offer only stocks & shares ISAs. Investments in ISAs are not subject to Capital Gains Tax and no higher rate income tax is payable on dividends received in ISAs. In April 2008 PEPs became ISAs and now follow ISA regulations. ISAs provide an attractive means by which tax-free capital gains can be accumulated and are especially attractive to higher-rate taxpayers due to the income tax benefit described above.
Q. Can I have income from my ISA paid to my bank account on a regular basis?
A. Yes, income can be paid to you either quarterly (end March, June, September and December), half-yearly (end June, end December) or yearly.
Q. Can I subscribe to more than one ISA?
A. With effect from April 6th 2008 each adult taxpayer will be allowed to subscribe up to £7,200 per fiscal year into an ISA. Up to half of this amount may be invested in a cash ISA and the balance may be invested in a stocks & shares ISA (either with the same provider or another provider). Under the new regulations cash ISAs may be transferred into stocks & shares ISAs (but not vice versa). Speirs & Jeffrey do not offer cash ISAs, which are offered traditionally by banks and building societies.
Q. How much can I subscribe to my ISA?
A. For 2008-09 up to £7,200 may be subscribed.
Q. Can I transfer my ISA from another manager?
A. Yes, we can accept transfers of all ISAs (Stocks & Shares ISAs and Cash ISAs) although if transferring a Cash ISA to us, you should consider the implications of making Cash ISA funds available for equity investment. Please speak to your Speirs & Jeffrey adviser for more details.
Q. Can you send a copy of my ISA statement to a third party?
A. Yes, if you instruct us to do so in writing.
Q. Do proposed changes to the CGT rules change the need for an ISA?
A. No, capital gains are still free of tax within an ISA whereas they will be subject to 18% tax outside an ISA. There is also an income tax benefit in ISAs for higher-rate taxpayers (but not for standard-rate taxpayers). ISAs will remain attractive especially for higher-rate taxpayers.
Q. How is my ISA management fee calculated?
A. These fees are charged on a quarterly basis at the following rates:
on the first £25k
0.175%
on the next £25k
0.125%
above £50k
0.075%
Q. How often and when are my management fees deducted from my ISA account?
A. Quarterly management fees are debited to ISA accounts on the 14th of March, June, September and December each year.
Q. What rate of interest is currently being paid on cash held in my ISA account?
A. Interest on cash balances is earned at a rate equivalent to 1.00% below Bank of Scotland Base Rate. Interest earned within ISAs is subject to deduction of 20% tax. It is important to note that cash held in ISAs is intended to be held on a temporary basis pending investment or reinvestment in eligible assets.
Q. When is interest credited to my ISA account?
A. Interest is calculated daily and is credited quarterly to your account (at the end of February, May, August and November each year).
Q. When are ISA statements issued?
A. Statements are issued shortly after 6th April and 30th September each year and you should expect to receive them within two weeks of those dates.
Q. Why do I receive a lower level of interest on ISA Cash balances, than in the nominee?
A. Because of the higher administrative costs of compliance.