Have your clients used their annual ISA allowance?

Many advisers are faced with clients who are reluctant to do business in the current climate.

Despite this, there are steps advisers can take to help clients protect their legacy whilst still retaining immediate access to their capital.

Making sure clients have used their annual £20,000 ISA allowance can help even the most cautious investors to continue to build a tax-efficient legacy, that could support their beneficiaries for generations to come.

Find out how the Stellar AiM ISA IHT Service could work for your clients.

ISAs continue to grow in popularity

First launched in 1999, ISAs have steadily become one of the most popular saving tools for investors of all ages.

Statistics recently published by HM Revenue & Customs show that 13 million Adult ISA accounts were subscribed to in 2019-20. This is an increase from 11.2 million in 2018-19 and 10.1 million in 2017-18.

ISAs hold several benefits for investors. The primary of which is the ability to invest up to £20,000 without paying capital gains or income tax on the returns they generate.

In addition, whilst ISAs are generally not as tax efficient as pensions, they do benefit from instant access. This could be particularly valuable for clients who may be cautious given the events of recent years. Younger clients with more volatile finances may also prefer the idea of money they can access sooner if needed.

Making the most of an ISA allowance

ISAs are also a great planning tool, and careful investment management means that clients can accumulate substantial tax-free capital within their portfolio.

If people do not use their allowance before the end of the tax year, it cannot be rolled over. As a result, the start of the year is a particularly popular time for ISA investors looking to make use of their annual allowance.

Unfortunately, ISAs themselves are not exempt from inheritance tax (IHT).

However, since 2013, AiM listed companies qualify for full IHT relief and can also be included in ISAs.

How the Stellar AiM ISA IHT Service could work for your clients

The Stellar AiM ISA IHT Service is a discretionary managed portfolio, with the objective of enabling advisers to protect their clients’ legacies from the financial burden of inheritance tax.

AiM shares, when held in an ISA, benefit from IHT relief after only two years, as well as the income tax and capital gains tax benefits from the ISA wrapper. In addition, any capital growth is not subjected to capital gains tax.

Including between 25 and 40 AiM quoted companies, all of which qualify for Business Relief, our specialist team aims to provide a blend of capital preservation and growth.

The service works by either transferring existing ISAs or investing capital directly.

Transferring existing ISA investments is a simple way to improve tax efficiency, even in uncertain times.

To learn more about the Stellar AiM ISA IHT Service and how it could work for your clients, contact one of the Stellar team today on 020 3195 3500 or visit our service page.


Written by Jack Dobinson


Important Information

Stellar Asset Management Limited does not offer investment or tax advice or make recommendations regarding investments. Prospective investors should ensure that they read the brochure and fully understand the risk factors before making any investment decision. The value of investments and the income from them may fall as well as rise and is not guaranteed. No assurance or guarantee is given that any targeted returns will be achieved. Forecasts of potential future results are not a reliable indicator of actual future results.

Stellar Asset Management Limited of 20 Chapel Street, Liverpool, L3 9AG
is authorised and regulated by the Financial Conduct Authority.