Whether contributing to an Open-Ended Investment Company (OEIC) or unit trust arrangement, using your annual Individual Savings Account (ISA) allowance or investing in other arrangements, having an investment strategy is key to your overall financial planning, wealth management and income preservation. Tax and income tax planning could be a key issue for your objectives.

Keith and his excellent team at Chapters have provided invaluable advice and financial management for the past few years, since my husband had semi-retirement forced upon him! We're about to move house and I'm very keen for us to retain Keith's services as, having listened to him on "Moneybox" and other radio programmes, I find his advice to be clear, especially in layman's terms. He sets out the options, allowing people to make their own decisions based on his sound advice.
Mrs P. D. Surrey

Your Attitude to Investment Risk

In considering your overall circumstances, we will need to understand your attitude to investment risk. Issues that will influence this could be the length of time for which you wish to invest, your ethical views and the diversification we would recommend.

Diversification can come in the form of investing into different funds within one plan or investing into different plans. Although some funds may have performed well in the past (and past performance is not a guarantee of future performance) these may have high volatility, increasing the risk to an unacceptable level. Having all your investment eggs in one basket is not always a good idea.

As an example, some investment providers offer links to external fund managers which can improve diversification and potentially reduce risk. This can be achieved with investments such as ISAs, taxable investment arrangements and Self Invested Personal Pensions (SIPPs).

Highly topical in 2024, another important issue is your view on ethical, environmental, social and governance issues for your investment funds. Sometimes referred to as ESG, this might be of growing importance in your investment planning and we can discuss your requirements accordingly. If you are interested in ESG investing and want to understand how the metrics can be measured, then the following weblink may be helpful: https://www.msci.com/esg-ratings

Term of Investment

How long are you prepared for your funds to be invested? Are you investing for a specific purpose, such as school fees payments, or for a lump sum capital repayment at a specific point in the future?

Income or Capital

The objective of your investment will usually dictate what you want it to do for you. Also the way you contribute, either by lump sum or income will also guide our recommendations. Some clients prefer to invest lump sums to provide income, others wish to accumulate income to build capital. We will need to consider your current and future tax position (both income tax and capital gains tax) before making a final recommendation. The use of unit trusts/OEICs, investment portfolios, ISAs, investment bonds, Premium Bonds (a combination) or other types of investment vehicles may feature in our recommendations.

Active or Passive Investment?

We would normally recommend a mixture of actively managed and passive/index tracker funds. Both types of fund aim to generate returns from the assets they hold, whether these are stocks and shares, bonds, commodities or property, as examples. An active fund manager selects specific investments with the aim of outperforming the fund's benchmark or index. Actively managed investment funds would normally involve higher annual charges. Passive funds track a selected index, with the aim of delivering a return in line with the market in which they invest. As passive fund managers simply replicate an index, no active stock picking is involved, and costs are therefore lower.

To inform our investment strategy, Chapters Financial maintains and updates a regular view of the investment markets. We obviously have our own opinions and add to our robust procedures by consulting with an independent specialist, Steven Williams, Director at Cormorant Capital Strategies Limited on a quarterly basis.

More detail on the work of Cormorant Capital Strategies Limited can be found here.

Chapters Financial Limited is not responsible for the content of external webpages.

Balance and Re-Balance

Many of the recommended investment/pension holdings recommended by Chapters Financial Limited over the years have been diversified into various areas to create a balance based around your overall attitude to investment risk.

As time moves, invariably so does the balance of your investment holding. Because of this we would recommend that you review this balance on a regular basis to ensure that it continues to meet with your attitude to investment risk and your circumstances, which may have also changed over time.

Tax Position of Investment

Individuals - Understanding your individual tax position is vital in recommending the right plan. There is little point in achieving your objectives if any income or growth generated is taxed inefficiently. We will consider using investments that use your tax allowances in an efficient way to gain the most benefit from your investments. Examples of this could be to use your capital gains tax (CGT) allowance, (£3,000 gross in 2024/2025), and your ISA allowance.

Higher rate income tax usually starts at a level of £50,270 gross pa in the tax year 2024/2025. This takes into account the personal allowance which is £12,570 gross in the current tax year.

The additional rate income tax level of 45% will apply to those earning over £125,140 gross per annum for the tax year 2024/2025.

Trusts - The scope for trusts (and Charitable Trusts) to invest has increased significantly in recent years, following the Trustee Act 2001. Again tax savings are available to trusts by using their capital gains tax allowance, (currently £1,500 per annum in 2024/2025).

ISA / NISA contribution allowance

The ISA/NISA limit for the current tax year (2024/2025) is £20,000.

On 01 July 2014, greater flexibility was introduced in the way this money can be invested (cash and stocks & shares). This is referred to as the New ISA (NISA for short). From April 2016, savers have the flexibility to take money out of their ISAs and pay it back in, without this counting towards their annual ISA allowance.

Also, possibly more interesting for some, the value of the ISA passed on in the event of death to a spouse/civil partner can now continue to enjoy its beneficial tax status into the future.

Help to Buy ISAs

Help to Buy ISAs were an initiative from the Government, released in December 2015, and closed to new accounts on 30 November 2019. The full details from the Government can be found online at the following address: www.helptobuy.gov.uk

Lifetime ISAs

As announced in the Budget on 16 March 2016, a new Lifetime ISA came into effect from April 2017, allowing those aged between 18 and 40 to save up to £4,000 a year until their age of 50. Contributions into the Lifetime ISA will receive a government bonus of £1 for every £4 contributed, up to a maximum of £1,000 a year. The accumulated fund value can be used towards a deposit on a first home worth up to £450,000 or to save for retirement.

Accounts are one per person, not one per home. Individuals will be able to withdraw the savings at any time before the age of 60 for any other purpose, but will then lose the government bonus, and any interest / growth on this, and will also have to pay a 5.0% charge. The Government is exploring whether to allow people to replace their contributions at a later date and to retain the bonus.

After the age of 60, individuals can take out all the savings tax-free.

For those with Help to Buy ISAs, these funds can be transferred into the Lifetime ISA or saving into both can continue. However, the bonus from one fund only can be used to buy a house.

National Savings and Investments (NS&I)

NS&I arrangements can offer a secure solution to savings, at a low level of investment risk.

The maximum that can be held in Premium Bonds is £50,000 for individuals. There is no return in the first calendar month and any winnings are received tax free. Access to your funds is usually quick.

In addition, NS&I offers other accounts that are secure and government-backed. This means that the deposit protection limit is not applicable, and some accounts allow investment up to £1M. Please see the NS&I website for their current terms and conditions.

Junior ISA/Child's ISA

The Junior ISA arrangement, introduced in November 2011, allows a parent / grandparent / other contributor to pay up to £9,000 (tax year 2024/2025) into an account and for any growth to be tax efficient. This is for children born after 02 January 2011 and not eligible for a Child Trust Fund voucher. Many parents and grandparents may find this of interest for the tax efficient accumulation of benefits for their family in the future.

Review - Through the changes that have occurred with ISA regulations in recent years, it is always worthwhile reviewing your existing investment strategy (including ISAs), your asset allocation and your need for income, capital growth or both. This will usually be based on your circumstances and your attitude to investment risk. A guide to investment risk can be found here.


Think about your investment strategy at the moment, when did you last review this, and is it still doing what you first aimed for? Let us know what you want to achieve.

Please note that this is for guidance only and we recommend that you seek further advice from an Independent Financial Adviser before proceeding further. The Financial Conduct Authority does not regulate taxation and trust advice.