2 - Platform Wrappers

• Overview of Wrappers

  Know the range of typical wrappers available: general investment accounts; protection policies; investment bonds – onshore, offshore; ISAs; pensions
• Platform

  • Provides a range of tax-efficient wrappers (such as ISAs, insurance bonds, and pensions) to enable investors to maximise their tax-free allowances
• Most popular term for tax-efficient products is wrappers, conveying the sense that the investor wraps money or assets within a product to benefit from any associated tax exemption
• Regulations creating tax-efficient products will usually restrict the types of investors who can open such a product
• Most platforms include a product wrapper that carries no tax advantage but enables all investors to make any other investments they wish from the asset range supported by that platform
• Typical wrapper types

  • GIA
  • stocks & shares ISA
  • cash ISA
  • Junior ISA (JISA)
  • Lifetime ISA
  • onshore bond
  • offshore bond
  • self-invested personal pension (SIPP)
  • insured personal pension
  • S32 buyout bond
• Wrappers

  Know the regulatory limitations and restrictions associated with these wrappers: contribution limits; restrictions around withdrawals; restrictions around investment eligibility; restrictions around client eligibility; ISA guidance notes – applications & transfers, subscriptions, Investment activity, reporting, void & repair; pension regulations – HMRC Pension Tax Manual: (allowances, tax reclaim, investor documentation, member benefits, death benefits)
• ISAs were introduced by the UK government in 1999 to provide a tax-efficient mechanism for citizens to save and invest
• Investment growth and income generated within an ISA are exempt from income tax and capital gains tax
• The government sets an annual subscription limit which determines the maximum amount of money that each person can subscribe to ISA products each tax year
• For many years, there were just two types of ISA: a cash ISA and a stocks & shares ISA
• An investor could have either or both types in each tax year, though only half of the annual subscription limit could be put into their cash ISA
• Rules allow a stocks & shares ISA to hold uninvested cash and a broad range of investments, with no restriction on when or how much money can be withdrawn
• Any private individual who is a UK resident and aged over 16 may apply for a cash ISA
• To apply for a stocks & shares ISA, the individual must be over 18
• In recent years, governments have introduced new types of ISAs such as Innovative Finance ISA, Help-to-Buy ISA, and Lifetime ISA (LISA) with different purposes or focuses
• Lifetime ISA (LISA) was launched in 2017 to support those saving to purchase their first residential property and/or to help investors save more for their retirement
• The government pays a bonus of 25% of all monies subscribed into a LISA, with additional restrictions applied to both investor eligibility and withdrawals
• The government pays a bonus of 25% of all monies subscribed into a LISA as an incentive for retirement savings
• An investor can only open a LISA up until their 40th birthday and make subscriptions until they are 50 years old
• An individual can subscribe to more than one ISA product in a single tax year, provided they are ISAs of a different type
• A platform operator needs to understand the rules governing ISA products to ensure compliance
• Investors can transfer accounts to different providers while retaining tax benefits of the wrapper
• Investors can transfer value between different types of ISA products
• The ISA subscription limit was originally a fixed sum of money that could be subscribed during the tax year, regardless of withdrawals made
• Under the 'flexible ISA' rules introduced in 2016, the manager of a stocks & shares ISA can allow customers to replenish any withdrawn subscription sums in cash during the same tax year
• ISA rules have been amended to allow the surviving spouse an 'additional permitted subscription' (APS) equal to the value of the deceased spouse's ISA
• For tax year 2023–24, the annual ISA subscription limit is £20,000, with a separate limit of £4,000 for LISAs
• The Junior ISA was introduced in 2011 and is available to UK residents under the age of 18, with options for cash or stocks & shares accounts
• A child can only hold a total of one JISA of each type and withdrawals are prohibited until the child is 18 years old, except in cases of terminal illness
• JISA was introduced in 2011 and is only available to UK residents under the age of 18
• Types of JISA


  • Cash account
  • Stocks & shares account
• A child can only hold a total of one JISA of each type
• Withdrawals from the JISA are prohibited until the child is 18 years old, with exceptions for terminal illness or death of the child
• Any JISA transfer must include all money invested in prior years
• For 2023–24, the JISA subscription limit is £9,000, which can be used for any combination of cash and stocks & shares JISA subscriptions
• The JISA limit is in addition to any standard cash ISA the individual may open from the age of 16
• At age 18, the JISA matures into an adult ISA
• A child can open their own JISA account from age 16, or a person with parental responsibility can open the JISA for the child
• Investors must apply for an ISA (either in writing or not in writing) and provide specific information as per HMRC's guidance