Savings & Investment

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Past performance is not a reliable indicator of future performance and should not be relied upon.

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

  • Asset-backed Investments
  • Platforms
  • Investment Overviews
  • Deposit Based Investment
  • ISA’s

Whether you’re saving for the short term or investing for the long term we’ll outline what’s available and what you need to think about before recommending the most suitable option or options for you.

Savings are generally for times when you may need to get at your money more quickly or you don’t wish to accept any risk to your capital. We can help you select suitable savings accounts depending on your circumstances and objectives.

Savings are different from investments, which are really for the longer term.

When investing, you take more risk to increase your chances of getting higher returns on your money, especially over the longer term (usually ten years or more).

We will discuss your attitude to investment risk, diversification, how to invest for different objectives and targets, asset allocation, and the different tax wrappers available to you before making any recommendations about a suitable investment strategy.

In most instances we suggest clients have a combination of savings and investments to address different goals and time horizons

Asset-backed Investments

Different types of asset-backed investments include:

  • Shares
  • Gilt-edged Securities (Gilts)
  • Friendly Societies
  • Unit Trusts
  • Individual Savings Accounts (ISAs)
  • Investment Trusts
  • Open Ended Investment Companies (OEICs)
  • Investment Bonds


Shares are issued by companies who wish to raise money.

The best known shares are bought and sold daily on international Stock Markets. There are several different types of share but the most common are simply called ‘ordinary shares’. A shareholder will normally receive a dividend twice a year which is related to the profitability of the company. The board of directors decide how much the dividend will be in any given year. Dividends can be raised, lowered or stopped altogether, but past experience has shown that over the medium to long-term they tend to rise, thereby giving investors some protection against inflation, however this is not guaranteed.

In the short-term, share prices may fluctuate in response to changes in opinion about the company itself or the general outlook for business and the economy as a whole. However, in the medium to long-term, past experience has shown the tendency for share values to rise (ie. capital growth). This helps protect the real value of the investor’s capital against inflation.

Please note past performance is not a guide to future performance.

Selling shares may produce a capital gain for investors (ie. the value realised at the sale may be greater than the value at the time of purchase). A capital gain realised on the sale of shares is potentially liable to Capital Gains Tax.

Capital losses may be set against gains for tax purposes. Investing in individual shares can be risky and picking the wrong company could mean losing some or all of the original investment.

Investors may pay personal tax on income or gains unless the shares are held within and ISA.

* See below for tax treatment of dividends on shares.

Gilt-edged securities (Gilts)

Gilts represent borrowing by the Government and, therefore, have the highest degree of security.

An investor in Gilts will be guaranteed a fixed yield (or coupon) for the life of the stock. This is normally paid twice a year. Gilts can be purchased from the Bank of England or a stockbroker.

Gilts are traded daily and the market price fluctuates in response to market sentiment and current prevailing interest rates.

The price quoted shows the cost of purchasing stock that will be redeemed on the redemption date at £100 (the ‘par value’). The market price is usually less than the £100 par value, but if the interest rate is very attractive compared to current prevailing interest rates it may be more than £100.

Most gilt-edged securities have a redemption date (or dates) at which time the Government guarantees to repay the investor the full par value of the stock held. The investor will make a capital gain if the market price paid for the stock was below par value. If the market price was greater than par value then there will be a capital loss.

There is no tax to pay on any capital gains made on Gilts. Some Gilts are index-linked which means that the redemption values and the annual interest are increased in line with the Retail Prices Index. This protects the investor against inflation.

* See below for tax treatment of dividends on Gilts.

Friendly Societies

Friendly Societies offer 10-year qualifying savings plans, which invest in cash deposits, managed funds or with profits funds. They are free of Capital Gains Tax and income tax.

The monthly limit for tax free status is £25, making a total contribution of £300pa. The maximum if paid by lump sum is £270.

Unit trusts

Unit Trusts are pooled investment vehicles. This means relatively small sums from clients are pooled to form a large fund, which is able to invest in a broad spread of stocks and shares and other assets.

Investors’ interests are protected by the terms of a trust deed which must be approved by the Financial Conduct Authority before a unit trust is authorised to accept clients’ money.

Because they invest in stocks and shares, unit trusts must be viewed as medium to long-term investments. This means that they should be held for at least five years, preferably longer, in order that the investor can potentially benefit from capital growth and a rising income. Unit trusts offer investors significant advantages. The fund can invest in a broad spread of stocks and shares which brings greater security than investments into a individual company’s shares.

Each fund will benefit from the expertise of a professional fund manager who takes on the responsibility of the day to day investment decisions. Unit trusts offer a simple way of benefiting from an investment in the stock market. They avoid the complications and many of the risks associated with a person buying and selling individual stocks and shares. Units can be easily bought and sold and the prices are published in the press. The price at which units can be purchased by individuals is called the offer price which is higher than the selling or bid price. The difference between the two is known as the bid-offer spread.

The prices of units are determined by the value of the assets in the fund. As the asset value rises or falls so do the offer and bid prices of units.

Income from assets owned by a unit trust is accumulated and regularly distributed to unit holders (normally twice a year). Alternatively income may be re-invested by purchasing more units. Income, whether distributed or re-invested, is liable to income tax.

If, when units are sold, their value is greater than when they were purchased the investor will have made a capital gain. This is potentially liable to Capital Gains Tax if it exceeds the investor’s exemptions and reliefs.

* See below for tax treatment of dividends on Unit Trusts.


Available since April 1999, ISAs offer an attractive tax-efficient shelter to anyone aged 18 or over (16 or over for cash ISAs).

There is an annual allowance that can be invested into ISA’s per person.

Investment trusts

Although branded ‘trusts’, investment trusts are not subject to a trust deed like unit trusts are. However, they are a pooled investment.

Investment trusts are limited companies and their company directors are usually fund managers or investment experts. Their profit is made for their shareholders by buying and selling financial instruments, such as stocks and shares. It is possible for shares in investment trusts to be ‘trading at a premium’ or ‘trading at a discount’ for example:

  • shares in issue = 1 million.
  • underlying asset values = £1 million.
  • therefore each share is worth = £1.

This £1 is open to fluctuation due to influences and market sentiment just like stocks and shares. Therefore if the shares are trading at £0.95p they would be trading at a discount. If they were trading at £1.05p they would be trading at a premium.

Investment trusts are closed ended investments (unlike unit trusts which are open ended) and should they wish to acquire more investments than their share capital allows, they can benefit by ‘gearing’.

This simply means that they can borrow money to invest. Therefore a ‘highly geared’ investment trust would have large borrowings and could be considered high risk, especially in a falling (bear) market place.

All the tax implications for investment trusts are the same as shares as this is actually what the investor buys.

Open Ended Investment Companies (OEICs)

An OEIC could be considered a hybrid between a unit trust and an investment trust company.

The reason for their introduction into the UK (in 1997) is because they fall in line with their European counterparts, making the marketing of UK collective investments much easier and understandable both here and in Europe.

OEICs benefit from single pricing, rather than the UK’s traditional dual pricing (the bid offer spread). They have the same buying and selling price with initial, exit and annual management charges expressed separately. A guide to their basic structure is:

  • They are recognised incorporated companies.
  • Like investment trusts, investors buy the company’s shares and benefit by the income and growth, or both, of the underlying shares they are trading in.
  • The trading price of OEIC shares is based on the underlying asset value, like unit trusts.
  • Like unit trusts they are open ended investments that can expand and contract to meet consumer demand.

All the tax implications for OEICs are the same as shares, as this is actually what the investor owns.

 *Tax Treatment of Dividends on Shares, Gilts and Unit Trusts

The first £5,000 you receive in dividends from investments is tax free. Above this, basic rate taxpayers will pay 7.5% tax on dividends, higher rate taxpayers 32.5%, and additional rate taxpayers 38.1%.

Non-savings income is normally allocated against your tax bands before savings, dividends and capital gains, so to find out at what rate interest on your savings is taxed, you must add this to your other taxable income.

Higher-rate and additional-rate taxpayers must declare any dividend income on their tax return. If you don’t normally complete a tax return and are a higher-rate taxpayer who receives dividends, you need to let your tax office know.

Investment bonds

Investment bonds are single premium life assurance policies. There is a high allocation to investment and relatively low life cover. They are pooled investments whereby relatively small amounts of individual investor’s money will be invested to create large pooled funds, maintained by a life assurance company.

Investments can be spread across a broad range of assets including property, shares, Government stocks and companies’ loan stocks, thereby reducing the risk for investors. It is, however, very important to realise that investment bonds are medium to long-term investments. As such they should not be considered for periods of less than five years. There are two basic types of contract for investment bonds.

For the first of these (with-profits), the sum assured will be increased by bonuses related to the company’s profits.

For the second type of contract (unit-linked) the life assurance company maintains a number of underlying funds which are divided into units, the value of which is determined by the value of the assets in the fund.

The value of an investor’s investment will, therefore, be determined by the value of the units in the underlying fund and the amount of units that they hold. The funds may specialise in particular areas for example, property, shares, government securities, or they may cover some or all of these in a managed or mixed fund. Income and capital growth is accumulated within the funds.

The tax on income and capital gains is ‘deemed’ to have been paid at basic rate by Her Majesty’s Revenue and Customs. As long as their capital remains invested within an investment bond, investors will have no personal liability for either income tax or capital gains tax.

When money is withdrawn (for example, to provide income) or the bond is totally surrendered there will still be no liability for either basic rate income tax or capital gains tax (the fund has already paid these). Higher rate tax payers may have to pay extra tax.

However, the rules governing bond taxation are such that higher rate tax may be reduced or even avoided altogether with careful planning. It is normally possible for investors to withdraw money from an investment bond, either on a regular or irregular basis, without bringing the bond to an end. This is important where income is a priority.

Withdrawals can be made by surrendering part of a bond, but there can be adverse tax consequences for large withdrawals, and you should seek advice before making a partial surrender. However, some bonds divide the original investment into a number of small policies. In this case withdrawals can be made by totally surrendering some of these small policies. This may have certain tax advantages for the investor.

The value of your investment can go down as well as up and you may get back less than you invested. Tax concessions are not guaranteed and may change.


A platform brings together your investments and pensions online, allowing you to view them in one place – a bit like online banking.

Different types of investment, such as ISAs, Unit Trusts, Pensions and Bonds, are often held in different places, with different institutions or organisations. Getting a clear, concise view of all your investments can therefore be extremely difficult.

A platform gives you secure, online access to your investment funds, with a transparent, easy-to-understand charging structure. You can view your entire portfolio, use it to access a range of investment options and know exactly what you’re paying for your investments at any one time.

So rather than holding all of your ISAs, pensions and other investments in different places, you can view everything at a single glance.

This cuts down on paperwork, giving you a clearer picture of how your portfolio is performing. More importantly, it can make it easier for you and your financial adviser to make informed decisions about your investments, putting your future plans, financial position and attitude to risk first.

As with all investments, the value and the income generated can fall as well as rise. This means you may not get back what you originally invested or transferred into your account.

The risks in your portfolio will depend on the investments you have chosen. Your adviser should explain all these risks to you as part of their recommendation.

The performance of your investment will be reduced by the effect of charges, including platform charges, adviser charges, fund manager charges and tax wrapper charges.

Investment Overviews

This at-a-glance guide is designed to give you a quick snapshot of a range of different investment vehicles available.

It is important to note that the value of investments and income from them may go down. You may not get back the original amount invested and the levels, basis and reliefs of taxation are subject to change. This is not intended as an exhaustive guide.


Deposits may be held in:

  • Commercial banks
  • Building societies
  • ISAs

National Savings and Investments have a number of different instruments*:

  • Fixed Interest Savings Certificates
  • Children’s Bonus Bonds
  • Fixed Rate Savings Bond
  • Income Bonds
  • Investment account

Asset-backed investments can be held in:

  • Shares
    • Issued by companies to raise money
    • Dividends related to profitability
    • Potential Capital Gains Tax on realised gains when shares sold
  • Gilt-edged Securities
    • Government guaranteed
    • Fixed rate of interest or coupon
    • Interest liable for tax
    • Full nominal value repaid at redemption date
    • Some Gilts index linked
    • No Capital Gains Tax on Gilts
  • Unit trusts
    • Investors’ money pooled to form large funds
    • Medium to long-term investments in stocks and shares
    • Broad spread for greater security
    • Professional fund management
    • Units priced on the basis of the value of the underlying investments
    • Income distributed or re-invested
    • Income liable for tax
    • Potential for Capital Gains Tax
  • Cash ISA The overall limit for a Cash ISA is now £20,000 with the ability to transfer Stocks and Shares ISAs into a Cash ISA and vice versa.
  • Stocks and Shares ISA With a Stocks and Shares ISA you can invest the full £20,000 per year, The Stocks and Shares ISA must include a stocks and shares element. The overall limit at which you can invest in a Stocks and Shares ISA has been raised to £20,000 per year. Investors do not pay any personal tax on income or gains, but ISAs do pay tax on income from stocks and shares within the funds.
  • Tessa Only ISA Anyone who held Tessas will have previously converted these to TOISAs, these are no longer available and have been replaced by ISAs.
  • Investment trusts
    • Pooled investments run by limited companies
    • Medium to long-term investments
    • Professionally managed
    • Income and gains liable to tax
    • Stock market determines the price so shares can trade at a discount or a premium to the underlying asset value
    • The funds are ‘closed-ended’
  • Open ended investment companies (OEICs)
    • Pooled investments run by limited companies
    • Medium to long term investments
    • Professionally managed
    • Income and gains liable to tax
    • Single pricing based on the net asset value
    • Charges expressed separately
    • The funds are ‘open-ended’
  • Investment bonds
    • Single premium (i.e. lump sum investment)
    • Non qualifying life assurance policy
    • Medium to long-term investments
    • With profit or unit-linked
    • Withdrawals possible
    • No personal liability for basic rate Income Tax or Capital Gains Tax
    • Withdrawals may trigger a liability to higher rates of tax or the loss of age allowance for the over 65s

*These products and services are not regulated by the Financial Conduct Authority (FCA).


Equity based investments do not afford the same capital security as a deposit account. The levels, bases and reliefs from taxation are subject to the individual circumstances of the investor and may be subject to change.


Deposit Based Investment

There are various deposit-based investment vehicles available in the marketplace. Many customers will have money on deposit either with a bank or building society.

Every basic rate taxpayer in the UK now has a Personal Savings Allowance of £1,000. This means that the first £1,000 of savings interest earned in a year is tax-free. If you are a higher rate taxpayer (40%), then your allowance is £500, and 45% taxpayers have no savings allowance at all.

Commercial banks

Commercial banks offer a variety of deposit accounts. Interest, which varies in line with the general level of interest rates, is paid net of 20% tax.

Non-tax payers are able to reclaim the tax deducted or arrange to have the interest paid gross. Basic rate tax payers have no further liability and higher rate tax payers will be liable to a further 20% on the gross interest. Additional rate tax payers will be liable to a further 5% on the gross interest on top of the higher rate of 20%.

Building societies

Building societies also offer a variety of savings accounts each with different terms and conditions. Interest earned may be fixed for a specified period or vary in line with interest rates generally. Interest will be paid net of 20% tax.

The tax position is the same as commercial bank deposit accounts. Some accounts may restrict access to the money in the account and there may be penalties for early withdrawals.

Cash ISA

You can invest up to £20,000 per year in a cash ISA.

The cash ISA can consist of money on deposit enjoying a tax-free environment. The minimum age to own a cash only ISA is 16.

Cash Junior ISAs are now also available. Your child can have a Junior ISA if they:

  • are under 18
  • live in the UK

From 6 April 2015 it became possible for parents to transfer their children’s Child Trust Fund (CTF) account into a Junior ISA (JISA). At age 18 a JISA will now automatically turn into an adult ISA.

National Savings & Investments

National Savings & investments are Government backed. You can visit the NS&I website here

The Financial Conduct Authority does not regulate advice on deposits or National Savings & Investments products.



ISAs remain one of the most tax efficient solutions for your savings. On 1 July 2014, several restrictions were removed to improve flexibility and transfer options.

Under the so-called New ISA (or NISA), Cash ISAs and Stocks and Shares ISAs have effectively been merged, with the overall limit increased to £20,000. This can be invested in either Cash, Stocks and Shares, or a mixture of both.

You’ll also be able to transfer new and previous years’ ISA investments from Stocks and Shares into Cash, and vice versa, as opposed to previous rules which restricted cash ISAs being transferred into Stock and Shares ISAs.

From Autumn 2015 individuals may be able to withdraw money from some (flexible) cash ISAs and replace it in the same year without it counting towards their annual ISA subscription limit for that year. Please check with your provider.

What is an ISA? Available since April 1999, ISAs offer an attractive tax-efficient investment to anyone aged 18 or over (16 or over for cash ISAs).

Tax must be paid on the income and profits made from investments in the stock market, either directly or through unit trusts and OEICs.

ISAs, however, serve as a kind of ‘wrapper’ to protect savings from tax. This allows individuals to invest in a range of tax efficient savings and investments, and pay no personal tax at all on the income and/or profits received.

The Government has said that the ISA will be available indefinitely.

Help to buy ISAs A new ISA for first time buyers will offer a Government bonus when investors age 16 or above use their savings to purchase their first home. For every £200 a first time buyer saves, there will be a £50 bonus payment up to a maximum of £3000 on £12000 savings. The bonus will be available on purchases of homes up to £450,000 in London and up to £250,000 elsewhere.

The bonus will only apply for home purchase. Savers will have access to their own money and will be able to withdraw funds from their account if they need to for any other purpose.

The main benefits of an ISA

  • No personal tax (income or capital gains) on any investments in an ISA.
  • Income and gains from ISAs do not need to be included in tax returns.
  • Money can be withdrawn from an ISA at any time without losing the tax breaks.


How ISAs work There are two types of ISA, which may contain one or more of the following components:

  • Stocks and shares, in the form of either individual shares or bonds, or pooled investments such as open-ended investment funds, investment trusts or life assurance investments.
  • Cash, usually containing a bank or building society savings account.

Junior ISAs

Junior ISAs are now also available as both stocks and shares Junior ISAs and cash Junior ISAs, the current contribution limit for these is £4128 per annum, Your child can have a Junior ISA if they:

  • are under 18
  • live in the UK
  • weren’t entitled to a Child Trust Fund (CTF) account

The tax efficiency of ISAs is based on current rules. The value of your investment can go down as well as up and you may get back less than you invested. Tax concessions are not guaranteed and may change. The benefit of the tax treatment depends on the individual circumstances.