What is it?

It’s a Stock and Share ISA, also known as Investment ISA.

An ISA is a tax efficient savings plan, designed by the government that exempts any tax on the income or capital gains earned within our product. A Stocks and Shares ISA or Investment ISA allows investments in company equity shares, company and government bonds, and other assets, offering better potential for the investments to grow as compared to returns on a bank or building society savings account.

You should note that all investments carry an element of risk and you may get back less than the amount invested. Investment into a Stocks and Shares ISA should be seen as a medium to long-term investment and you should be prepared to commit for a period of at least 5 years.

Eligibility

You must be at least 18 years old and a UK resident for tax purposes to be eligible to invest. We will require your NI number in the application process.

How much can you invest

For the financial year 2022-23 the maximum that you can invest is £20,000. HMRC sets the maximum limit from year to year. The tax year for this purpose starts on 6th April and ends on the 5th April of the following year. It is important to note the deadline of 5th April to maximize the permissible investment in a year.

You have the option to invest in regular monthly instalments by Direct Debit with a minimum of £100 a month or by a minimum lump sum payment of £4,000.

How we invest?

Your contributions will go to the ‘With Profit’ fund of LICI UK. It is managed by a professional fund manager, within guidelines set by us. We assess performance of the fund based on 50% of your investment being in company equity shares and 50% in company and government bonds

How may your investment grow?

A ‘With Profit’ fund offers more predictable returns by smoothing out the ups and downs of the market. In years when investment returns are better, some of them are retained to be passed on during bad years. The aim is to give steady returns over the medium to long term.

Each year we consider the performance of the fund, and take into account advice from our Actuary. We then decide if an annual bonus can be awarded to your investment.  This should occur in most years but it is not guaranteed that it will.

For example there could be years when investment markets perform so badly that an annual bonus is not awarded. For customers who choose to withdraw their investment in such circumstances it is also possible that a reduction may be made to the value of their investment. This is known as a Market Value Adjustment and is there to protect those remaining invested in the fund.

When an MVR is applied you may get back less than the amount you had paid in.

The good news is that our Steady Growth ISA provides for MVR free dates on the tenth anniversary of the policy and the subsequent 5th anniversaries. This means your investment with the added annual bonuses is protected in value on those specified dates.

What are the charges?

There is an implicit yearly charge of 1.5% of the policy value, taken into account while declaring bonuses. Additionally, early surrender charges on the following scale also apply if there is any money taken out, partly or wholly, in the first three years of starting the policy.

Within one year since the start of the policy – 5% of the amount taken out

Between one and two years since the start of the policy – 3% of the amount taken out

Between two to three years since the start of the policy- 1% of the amount taken out

Risk you should consider

You should note that these investments carry an investment risk and you may get back less than the amount invested. It should be seen as a medium to long term investment and you should be prepared to commit at least for a period of five years. In summary the risks are –

  • Past performance cannot be taken as a guarantee of future returns.
  • Annual Bonus rates may vary depending on the performance of our investments and, in some years, we may not pay a bonus at all.
  • HMRC may change the tax status of stocks and shares ISAs in the future.
  • If you have invested through periods of poor investment performance, and you leave the fund, you may get back less than the current value of your plan due to a Market Value Reduction (MVR).
  • If you withdraw from your investment early, particularly in the first 5 years, you may get back less than you expected.
  • Inflation and making regular withdrawals may affect the purchasing value of your investment in the future.

 

Documents

If you want to buy a new policy or want to discuss further, please call us free on 08000 685712 or email to enquiry@liciuk.com