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How to invest in funds

How to invest in funds

Important information

Please remember that the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. If you are unsure of the suitability of your investment please seek advice. Tax rules can change and the value of any benefits depends on individual circumstances.

Just as cash can be held in various accounts, so too can funds. You can hold funds within a general investment account, or in tax shelters such as ISAs (Individual Savings Accounts) or SIPPs (Self Invested Personal Pensions).

ISAs

An ISA’s flexibility means it can be considered by almost any investor. Investments held within an ISA are sheltered from capital gains and UK income tax – less tax means higher returns.

Since the tax benefits of an ISA are so attractive, the amount that can be invested in each tax year is limited. For the 2018/19 tax year (which runs from 6 April 2018 to 5 April 2019), each adult may invest up to £20,000. Remember tax rules can change, and the value of benefits will depend on personal circumstances.

Find out more about the HL Stocks & Shares ISA and charges

Lifetime ISA

Adults under 40 can save up to £4,000 per year with a 25% government bonus towards a first home or later life. Early withdrawals will usually be subject to a 25% charge.

Find out more about the HL Lifetime ISA and charges

Pensions

Pension contributions receive up to 45% tax relief. For most people, the government will top up every £80 net contribution to £100 gross. Higher and top rate taxpayers can claim back more through their tax return, so £100 in a pension could effectively cost as little as £55. The amount of tax relief you can get depends on personal circumstances. Investments held within a SIPP are also sheltered from capital gains and UK income tax.

You can usually access money in a SIPP from the age of 55 (57 from 2028), with up to 25% tax free and the rest taxed as income. Tax rules may change in the future. Most investors can contribute as much as they earn, although a £40,000 annual allowance also applies for most people. Some can contribute more, and others less, so call us on 0117 980 9926 if you are unsure.

Find out more about the HL SIPP
and charges

Standalone investment

Alternatively, investors can choose to hold funds in an account such as our HL Fund & Share Account. Held this way, investments are subject to capital gains tax on profits, as well as tax on any income. They can be held jointly, for example with a spouse, or in an account on behalf of a child. Unlike ISAs and SIPPs, there is no restriction on the amount that can be invested.

Find out more about the HL Fund and Share account and charges

Next steps

If you'd like more of an overview of the accounts you can hold funds in, please see our 'Which HL account is for me' page to choose the right account for you.

Which HL account is for me?