There are many different types of asset - backed investments you can invest in:

• Stocks & Shares ISA (Individual Savings Account)

• OEICs (Open-ended Investment Company)/Unit Trusts

• Investment Bond (Onshore & Offshore)

• Investment Trusts

• Direct Shares

• Gilts/Corporate Bonds

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Stocks & Shares ISA

 

If you place your money into an ISA, you are investing in the markets. Therefore, your return can increase or decrease depending on performance.

• Money held within an ISA is exempt from Capital Gains Tax (CGT).

• An annual allowance for 2024/2025 is £20,000.00. This allowance cannot be carried forward, you have to utilise it within the tax year, however there is no ceiling on accumulated monies.

• An ISA allowance can be passed to a spouse upon death.

• You have accessibility to your money, however it is best to keep investing in an ISA for a minimum of 5 years.

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OEIC - Open-Ended Investment Companies/Unit Trusts

 

Open – Ended Investments are a collective of funds containing either shares (OEIC) or units (Unit Trust) and are managed by an investment manager. The manager pools together investors’ money to invest in the underlying asset and is able to establish more shares/units if instructed by investor. Therefore, the investment will rise and fall with the funds underlying asset. If dividends and interest are received income tax may apply and on any gain CGT may apply. An investor can offset any losses and carry forward into future years.

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Investment Bond

 

An Investment Bond is a life assurance policy where you can invest a lump sum into a variety of funds. Some have the option to have a fixed term and can provide expected rates of return. There are two types With Profits or Unit Linked - both have the same tax rules applied. Providers can allow investors to protect their capital from the outset for an extra cost, therefore if there is a significant loss the original amount invested is returned. A death benefit can be placed on the policy to enable 100% return of capital. Investment Bonds can be placed into trust for estate planning.

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Investment Trusts

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Investment Trusts are closed-end funds, invested collectively in public limited companies. They are traded on the stock exchange and do not always reflect the underlying value of the share portfolio.

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Direct Shares

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Otherwise known as equities. Shares are issued by companies to enable them to raise capital. Investors will invest for capital growth and income purposes over the medium to long term. A shareholder who invests in the company may receive dividends if the company makes a profit.  For business continuity it is beneficial if the company issues dividends to the shareholders.

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Gilts/Corporate Bonds

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Fixed Interest Securities otherwise know as Gilts. Gilts are issued by the UK Debt Management Office and can have terms with 5, 10 and 30 years. Corporate bonds are issued by companies with similar terms. A fixed rate coupon (interest) will allow the investor to know the yield (return) in advance, and because of this, investors find them attractive.

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Corporate bonds tend to be a riskier option than gilts as the company issuing the bond may suffer loss and not be in the position to pay back the loan to the investor, because of this yields tend to have a higher value. The company will have a credit rating and this will determine the price of the bond.

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The value of your investments and any income from them may fall as well as rise and is not guaranteed. You may get back less than you invest.

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HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

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