Individual Savings Accounts (ISAs) Questions Answered

ISA Questions Answered

What are ISAs?

Individual Savings Accounts (ISAs) are a tax free savings schemes in two separate components, Stocks and Shares (SAS) and Cash Account. We offer a Stocks and Shares ISA that also allows you to also hold cash as part of your investment strategy. Investments in an ISA are free of capital gains tax.

What were PEPs?

Personal Equity Plans (PEPs) were introduced back in the 1980’s to encourage investment in stocks and shares. PEPs were replaced by ISAs when the Government changed and in April 2008 they were merged into stocks and shares ISAs. You can transfer your ISAs that also contain your old PEPs with other managers into our ISAs.

Who can open a Stocks and Shares ISA?

Anyone 18 or over can open an ISA if they are resident and ordinarily resident in the UK for tax, or are Crown employees and spouse serving overseas.

What are the tax benefits?

You pay no capital gains tax on investments in your ISA (incorporating PEPs). Any dividend income received outside of an ISA must be listed on your tax return and higher rate tax payers will have to pay additional tax on the income not sheltered.

How much can I invest in an ISA each year and how?

You can subscribe up to £11,280 into ISAs in the 2012/13 tax year (£10,680 2011/12). This may all go into a Stocks and Shares (SAS) ISA or, up to half can go into a Cash account ISA. Only one SAS ISA and one Cash account ISA can be subscribed to in any given tax year but you can use different providers. ISA subscription limits will increase in line with the Retail Prices Index (RPI) at the start of each tax year. The annual limits will be rounded to the nearest multiple of 120, making monthly saving easier.

What can I buy in a Pilling ISA?

You can buy Qualifying shares officially listed on any recognised exchange. Qualifying Investment Trusts, Unit Trusts, Open Ended Investment Companies and UCITS are allowed. You can also buy Gilts, PIBs, Bonds, Convertibles and Preference shares, if they have at least 5 years to run when bought. Extra charges may apply to some overseas stocks so you should check with us before dealing.

What's excluded from ISAs?

Shares on the AIM and PLUS quoted markets, Options, Futures, Nil-Paid Shares and Warrants and shares in unquoted companies are excluded.

Can I buy and sell within my ISA?

Yes. You can trade as often as you wish, simply ring our team of dealers who will be pleased to assist you on +44 (0)161 832 6581.

Do you deal "instantly?"

Yes. Unlike some ISA schemes, we will deal for you as soon as possible. We do not deal only 'once a day', or even just 'on certain days of the week'. If preferred, you can often hold on the telephone while your deals are being done.

How do you confirm my deals?

A contract note is sent to you for every deal showing price, commission etc. If you do not have a contract note, or the contract you have received is incorrect please tell us without delay and at least within 2 business days. Regardless of cause, we can accept no financial liability for missing or incorrect contract notes unless brought to our attention within 10 business days of the original deal(s).

Who chooses the Investments?

You. We try to make sure the investments you choose for your ISAs are allowed. However, we do not accept any tax consequences and/or liabilities of any kind should we later find that, whatever the reason, you have chosen non-qualifying or unsuitable investments.

Our dealers are pleased to provide free investment guidance (always on a general "Execution Only" basis) to enable you to make your final investment decisions. However, you are always responsible for suitability and future investment performance. Our Investment Managers will be happy to provide more detailed personal analysis of your investment portfolio once you return our Client Agreement. Further details are available on request.

Will I get Newsletters?

Yes. We produce a monthly Newsletter which is available by email and online. We also post to you our "Pilling ISA and PEP Talk" every three months.

Can I transfer other ISAs and PEPs to Pilling?

Yes, we make no charge to receive ISAs (that might also contain your old PEPs) from other managers. You should check if your manager makes a transfer penalty. You may transfer part of a plan to us. We can now also receive “Cash” ISA transfers in to a “Stocks and Shares ” ISA (see PEP/ISA Transfer form).

Can I transfer shares from a profit sharing or share option scheme into an ISA?

Yes. Employees who receive shares in their company from an HMRC approved all employee savings related share option scheme, or profit sharing scheme, may transfer them into a Pilling ISA. You can transfer up to £11,280 worth of option shares into a ISA. Transfers must take place within 90 days of the stock leaving the approved scheme (see charges).

Can I transfer public offer shares into an ISA?

Sorry, this is not allowed. However, you may transfer them in by our “Bed & /ISA” scheme where we sell your shares and then buy them back into the ISA (see charges).

Can I transfer shares in my own name into an ISA?

Yes. We have to sell the shares and then buy them back into the ISA. This is known as a “Bed and ISA.” We need your share certificate(s) and a signed CREST transfer form for each holding. You may also buy different shares in the ISA from those you sell. However, the name on the certificate must be yours, your spouse’s or joint names (see below and the charges).

"Bed & ISA" - any special costs?

As "arm's length" deals, you pay the market-maker’s "turn" - i.e. the spread between the selling and buying prices goes to the market-maker. (We can often reduce this for you). You also pay 0.5% Government stamp duty on most purchases.

If the same holding is sold and then bought straight away in your ISA, you pay no commission on the sale and you just pay our normal rates on the purchase.

If you do not buy the same stock in the plan as the stock you are selling, then you pay a nominal charge of £10 per sale as well as the normal purchase commission.

May I leave cash in an SAS ISA?

Yes, but only as a short-term home for funds in times of market uncertainty. HMRC rules deter long term cash investment.

Do you pay interest on cash?

Yes. Quarterly, we pay gross interest on your cash on a tiered system at rates fixed by Pilling & Co. Your cash is always held in accounts segregated from our own, and only in banks which are authorised and regulated by the FSA. We pay interest to your account after avariable administrative deduction. Interest on cash in a stocks & shares ISA is subject to a 20% flat rate charge by HMRC. Our current rates are always available on request or can be viewed here.

How are dividends dealt with?

Dividends are credited to your Plan. If there is any tax due from interest payments from gilts for example, we will reclaim this from HMRC and add this to your account. Gross dividend income may be kept in the ISA or paid to you with no tax penalty. Simply tell us on the application form how you wish income to be treated. Simply tell us on the application form how you wish income to be treated.

Can I re-invest my dividends?
Yes. With the Pilling Dividend Re-investment Plan (“DRIP”), all your net dividends are re-invested upon receipt in the shares of the company paying the dividend. Our commission is low at 0.5% (with no minimum) as we may join your investment with other clients in the same stock. Simply elect on the application form for the “DRIP” scheme.

Can I have my income paid out to me?

Yes. With the Pilling Income Distribution System all your income is automatically paid straight to your bank or building society account on a quarterly basis at the end of January, April, July and October. We send you a statement showing the dividend(s) and the amount paid to your bank account. Payments at the end of the month include only dividends credited to the account up to the 5th of the month. Simply elect on the application form to have your income paid out.

Can I make withdrawals from my ISA?

Yes, you can take out cash and investments at any time without liability to Income Tax or Capital Gains Tax. All withdrawal requests must be in writing. Withdrawals can only be replaced up to the subscription limit for the current tax year.

How are my investments registered?

Through CREST, where available, in our nominee “St. Ann's Square Nominees Limited”. You are always the beneficial owner of the investments. They are never part of Pilling & Co’s assets nor, indeed, of the nominee company’s assets. There may be occasions when identical stocks are pooled together within Crest, or at another custodians, as one block under the title of SASNL. These cannot then be attributable to any individual client and ownership will be evidenced by an electronic bookkeeping entry at Pilling & Co instead of a physical certificate. In these circumstances you are warned, that in the unlikely event of an unreconcilable shortfall after the failure of a custodian, clients may share in that shortfall in proportion to their original share of the assets in the pool.

Are my investments secure?

Yes. Pilling & Co accepts absolute responsibility for St. Ann's Square Nominees Limited. Your investments are not only protected under the Financial Services Compensation Scheme (FSCS), but, with the security of Pilling clients in mind, we also maintain additional professional financial risks insurance to cover the changing level of turnover in our business. If your investments must be held by a third party, we will use our best endeavours to make sure that only recognised and well-respected financial institutions are used. There may be further risk with non UK based custodians because of different settlement, legal and regulatory requirements. In some cases dividend payments may be briefly held in a custodians overseas bank account before payment is made to Pilling & Co. However, we do not accept responsibility for such third party safe custody obligations.

How do you deal with “Corporate Actions”?

We write to tell you of any action effecting your investments including conversion and subscription rights, takeovers and similar offers. We process any capital reorganisations, demergers etc. You may only take up rights issues and open offers in an ISA if you have cash in the plan, or can add new cash to an ISA. If you do not have enough cash, then the funds must be raised inside the plan. If you can’t do this, you may still take up the entitlement outside your ISA. Where investments are pooled, entitlements are allocated on a “pro rata”
basis and are rounded down to the nearest whole unit.

You must give your clear instructions (preferably in writing) direct to the Pilling PEP/ISA Department or by email to CAISA@PILLING.CO.UK by the requested date, or we can accept no responsibility whatsoever for any resulting losses or liabilities.

Can I borrow against my ISA?

No. You must always remain the beneficial owner of your ISA investments. They may not be used as security for a loan.

Do I get valuations and statements?

Yes. At no extra cost, as at 5^th April and 5^th October each year, we send you six-monthly statements and valuations as soon as possible after these dates.

Can I have Company Reports and Accounts?

Yes. We can arrange this but, to keep down costs, we suggest you get these from the Company Registrars direct.

Do I have the same rights as an ordinary shareholder?

Yes. By negotiation, we can arrange for you to attend company meetings, to vote and to receive any other relevant information that is sent to share or unitholders direct.

Can my ISA be 'voided'?

Yes. We regret that if your plan fails the provisions of the ISA Regulations, it may have to be cancelled ('voided') and we will tell you as soon as possible. However, this is a rare occurrence and we make every effort to ensure this does not happen.

Does Pilling administer its own ISAs?

Yes. All our ISAs are administered 'in-house' by our own staff and we never delegate our ISA role to a third party.

How are Pilling ISAs 'Low Cost'?

The annual charge for your Pilling ISA can be as low as only £13.50 (two processed dividends of £6.75).

Why choose the "Dividend Fee" basis?

If you have a small number of holdings, or are a more active trader who rarely holds a stock long enough to have dividends, this could be for you.

Why choose the "Annual Fee" basis?

This can be a good choice where you have a large number of holdings in your Pilling ISAs with lots of dividends, as our maximum annual fee is only £150 + VAT. You may also combine your account with your partner for fees purposes only and pay a maximum of only £200 + VAT with a minimum of £60 + VAT.

Can I switch between the two Pilling Charge Structures?

Yes. Just write to us at the start of the tax year (6^th April).

Any charges to close or transfer a Pilling ISA?

Cash can be withdrawn at no cost on closure, or on full or part transfer to another ISA manager. You may prefer to sell investments at our normal dealing rates to convert them into cash. Shareholdings can be transferred from Pilling ISAs at £20 + VAT per holding. Investors withdrawing from our "Annual Fee" ISAs are charged on a 'pro-rata' basis for the part of the tax year the plans were open with us. Plans that are closed and have never been invested will be charged a “failure to invest” fee of £20 + VAT. Please note that transfers of ISAs can take up to a month to process.

What are the dealing charges?

With a minimum of only £10, our commission per deal is 1.65% of the first £10,000 value, 0.5% of the next £90,000 and 0.4% of any excess. We must charge you Government stamp duty at 0.5% of the value when buying shares, preference stocks and convertibles.

Any commission on unit and investment trust deals?

Yes. The commission for buying and selling investment trusts is our normal scale, as are unit trust sales. No commission will be charged on buying unit trusts when we are paid commission from the managers direct.

Are there any extra charges on overseas securities?

Whenever possible we trade and hold overseas securities through Crest and although the handling costs are higher than UK securities, Pilling & Co absorb the fees and no extra charge is made.

However, if you choose an investment which cannot be traded or held via Crest and a third party has to be used, the cost incurred will be passed on to you. This currently is £70.00 per trade and £70.00 annual holding fee.

Can my investments be sold without my permission?

We reserve the right to sell or realise any investment which we are holding (or entitled to receive) on your behalf in order to meet any liabilities you may have incurred to us. Our right to sell any such investment will arise immediately upon default by you in making payment of any amount due to us and in that event we are entitled to sell or dispose of all or any part of such investment (whether these be investments in respect of which the default arises or any other investments for the time being held by us or which we are entitled to receive on your behalf) after the expiry of any statutory notice period.

We shall not be liable to you in respect of any loss arising nor in respect of any choice made by us in selecting the investments to be sold. We will apply the proceeds of sale (net of costs) in or towards discharge of your liabilities to us and will account to you for the balance. In the event that such proceeds are insufficient to cover the whole of your liabilities to us, you remain liable for the balance.

We shall be entitled, without further reference to you, to buy any investment in the market to close any short position created by you and then, subject to any statutory notice period, sell or dispose of any other investments held by us or which we are entitled to receive on your behalf to satisfy in whole or in part the sums due on settlement of any such purchase and its associated costs. We shall not be responsible for advising you about the investment merits of any transactions effected by us pursuant to this section which in all cases will be treated as execution only deals.

Further Information

	Can I open an ISA this year?
	Choose Your Charges
	Charges at a Glance
	How to open an ISA
	ISA Application Forms
	ISA Transfer Form
	Stock Transfer Form
	Crest Transfer Form
	ISA Brochure and Application Forms

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