EXPLANATION OF FINANCIAL TERMS
The Investment Management Regulatory Organisation (IMRO) regulates about 1,100
fund management firms including portfolio managers, pension fund managers, unit
trust managers and trustees, investment trust managers and managers of unregulated
collective investment schemes.
Also referred to as pension
fund withdrawal. This allows investors to delay buying an annuity and to take
an income direct from their pension fund at retirement. Only advisable for pensioners
with funds of at least £100,000 or other income.
Tax paid on any income earned
over your personal allowance (£4,195 for the 1998/99 tax year). The first
£4,300 of taxable earnings incurs 20 per cent tax, from £4,301 to £27,100
incurs 23 per cent tax, and over £27,100 incurs 40 per cent tax
Holders of income units receive
regular dividend cheques. The price of their units is lower than accumulation
units where the dividend is not paid but rolled up into the price.
The basic principle of insurance.The
payment that you receive after a mishap leaves you in the same financial position
as you were before you suffered the loss.
These investment funds back
shares but are relatively low risk. The fund managers simply spend the money on
shares in a popular stockmarket index such as the FTSE 100. Over the longer term
main market indexes such as the FTSE show a reasonable rise.
Individual Savings Account
ISA is the new tax-saving plan
available from April 6, 1999. It will replace Peps and Tessas, enabling investors
to protect shares, unit and investment trusts, cash deposits and some life insurance
policies from tax.
Up to £223,000 - the current
inheritance tax exemption - of a deceased person's estate can be transferred to
beneficiaries free of tax. Any assets above this will be taxed at the rate of
40 per cent.
Following a ruling by The Advertising
Standards Authority, any account which describes itself as instant access must
allow for immediate withdrawals to be made in cash. This limits instant accounts
to either branch based or cash machine.
Insurance premium tax
A tax imposed by the Government
on many non-life insurance products such as travel insurance.
An investment fund which pools
investors' money and invests it on their behalf, usually in shares. It differs
from a unit trust in that investors hold their stake as shares in the trust rather
than units. An investment trust is set up as a listed company with a limited number
of shares that investors can buy and sell on the stock market. The trust's shares
may trade at a price higher or lower than the value of its underlying assets -
trading at a premium or discount.
The individual savings accounts
is to be introduced on 6 April 1999 by the Government to replace Tessas and Peps.