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Understanding
tax wrappers

Wrap accounts are an investment structure that help to manage investment portfolios, allowing for
consolidation of investments and efficient tax management.

The structure of most wrap accounts allows for investments into all traditional investment types including cash, bonds and shares, unit trusts and pension funds. These account structures can also bring together various tax wrappers such as Individual Savings Accounts (ISA), General Investment Accounts (GIA) and Self-Invested Personal Pensions (SIPP), which ultimately assists in the management of your personal tax bill.

The services that these wrap account providers offer are very similar in nature, but the issue of cost always needs to be taken into account. Here at Sable International, we have working relationships with the leading platform and wrap account providers in the UK and are able to offer each individual the solution that will work best under their unique circumstances.

There are a number of different tax wrappers that the investor can utilise in order to better manage their investment. These include:

  • Pension wrappers

  • ISA wrappers

  • GIA wrappers

Pension wrapper

Pensions are currently one of the most tax efficient ways to invest for the long term and should be used to their full extent. Although, on the downside, your funds are tied up until you retire, it is often more advantageous to take advantage of the tax concessions these investments offer.

The principal benefits and conditions of a personal pension are as follows:

  • The funds in which contributions are invested benefit from tax advantaged growth. Income from rents, deposits and gilts remains free of tax, as do capital gains.

  • You can contribute a maximum of £40,000 per annum into a pension. The amount being contributed into the pension enjoys income tax relief at your highest marginal rate.

  • Employees and the self-employed are entitled to make payments net of basic rate tax. A separate personal assessment will make a higher rate tax relief available to these individuals.

  • Employers, including 100% owned limited companies, are also able to make a direct contribution. Such payments must be paid gross but are relievable for corporation tax and not accountable for National Insurance contributions.

  • Pension benefits can be drawn on retirement at any time from age 55. We expect this retirement age to increase over time to reflect upward movements in the State Pension age.

  • At retirement, 25% of the accumulated fund can be taken as a tax-free cash sum, the balance providing a pension taxed as earned income. As of April 2015, the balance of the fund can be taken as a lump sum but subject to your marginal tax rate at the time.

  • In the event of death occurring before the selected retirement date, the accumulated fund can be passed to your chosen beneficiaries, completely free of Inheritance Tax, by means of either a prior nomination given to the life office or a declaration of trust, depending on the life office's requirements.

  • If you plan to retire in a country other than the UK this pension can be transferred without any tax charge to your destination country through the QROPS system.

ISA Wrapper

ISA stands for Individual Savings Account. As a UK tax resident you are able to invest your after tax earnings into the account. There is an annual cap on the amount that can be invested into the ISA, which is currently £15,000 per annum.

All gains, income and dividends earned by the investments in the wrapper are tax exempt. As such, an ISA provides tax-free growth on your investments.

An ISA does not have any access restrictions and you can liquidate your investment at any time. You are able to transfer your ISA investments to a different provider and retain the previous allowance limits. This process is called an ISA transfer.

GIA Account

A General Investment Account (GIA) is an investment without an upper limit, although tax is payable on the growth made within this wrapper. The GIA account is used predominantly for those investors who have already invested the maximum annual allowance into their ISA and who are making significant contributions to their personal pension.

Contact our wealth team

South Africa

Regent Square
Doncaster Road
Kenilworth 7708
Cape Town
t: +27 (0) 21 657 2120

United Kingdom

Castlewood House
77/91 New Oxford Street
London
WC1A 1DG
t: +44 (0) 20 7759 7514

Australia

Suite 8.06
9 Yarra Street
South Yarra
Melbourne VIC 3141
t: +613 (0) 86 514 500

Hong Kong

Level 1102
The Lee Gardens
33 Hysan Avenue
Causeway Bay, Hong Kong
t: +852 3959 8681

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