Frequently asked questions
What are Individual Savings Accounts?
Individual savings accounts (ISAs) are tax efficient investments, which have a variety of uses, depending on the circumstances of individual investors. Investments held in an ISA or a PEP are exempt from income tax and capital gains tax.
UK dividends within an ISA or a PEP benefited from a tax credit of 10% up to 5 April 2004. There is now no tax credit.
This does not affect interest payments, which will continue to receive a 20% tax rebate (Corporate Bond Funds holding at least 60% in qualifying corporate issues).
There is no fixed investment term for ISAs, so you can save for as long or as short a period as you wish.
Where they include stock market investments, we recommend that they should be held for at least five years and in general they should be left invested for as long as possible to get the best from the investment.
Investment in ISAs can be made by lump sums or monthly contributions or a combination of both. Each person may invest up to a maximum of £7,000 in an individual savings account in any tax year (£7,200 from the 2008-2009 tax year).
ISAs are available in two forms, the Mini ISA, in which cash, insurance products and stocks and shares investments can be held in separate parts, and Maxi ISAs, which combine the parts, allowing the full annual allowance to be used for stocks and shares investment if required.
What are Stakeholder ISAs?
Stakeholder ISAs replaced CAT-standard ISAs from 6th April 2005.
The Government has set certain voluntary guidelines for ISAs to meet in order to be considered stakeholder compliant. There are limits on charges which vary according to the investments chosen.
Also, investors must be able to get their money back or transfer out without penalty or other restrictions, as well as be able to invest relatively low minimum investment amounts.
Are these risky investments?
When considering investments past performance is not a guide to future returns, which are not guaranteed. The value of investments and the income from them will fluctuate and you may not get back the full amount invested, particularly in the short term.
What are Personal Equity Plans?
Personal Equity plans are tax efficient investments, usually in unit trusts or investment trusts. All income and capital gains from PEP investments are free from higher rate income tax and from capital gains tax. There is no fixed investment term for PEPs, so you can save for as long or as short a period as you wish.
Interest payments receive a 20% tax rebate (i.e. Corporate Bond Funds holding at least 60% in qualifying corporate issues).
Why Fidelity Funds Network ISA?
The Fidelity Funds Network ISA is a specialist product, which allows us to take particular advantages not usually available for ISA investment. This arrangement allows us to use our extensive investment research to select suitable investments from a number of different investment managers and manage the portfolio within an Individual Savings Account.
We are able to choose funds from a range of investment experts in the same tax year, all within the tax efficient environment of the ISA. We can change the choice of investments for future savings and move investments between investment houses, while still remaining in the ISA. This gives us great flexibility and opportunities for investment.
In other words, the Fidelity Fundsnetwork ISA is the tax free ISA wrapper and we choose which investment funds we want to put in it, from a wide selection of different types and styles of funds from different investment companies.
