Advisers should be able to take into consideration investment type as well as their clients' tax circumstances when giving ISA advice, says Fidelity.
Although ISAs may appear equal at face value, both an investor's individual tax circumstances and type of investment held play "a significant role" in determining eventual tax benefits, says the fund house.
"It is possible to look at the type of investment coupled with the investor's tax rate and calculate the additional tax boost the ISA provides," says Fidelity director of tax & trust planning Paul Kennedy.
He adds although investment decisions should first and foremost correlate to risk objectives, where clients have a broad range of assets, advisers should consider how to best use their ISA allowances.
Fidelity says it is important to understand the discrepancy between the percentage boost the ISA provides and the actual amount of money saved. A 67% boost on an investment return of £100 outside an ISA equates to boost of £67, whereas a lower boost of 22% on an investment return of £400 produces a higher boost of £88.
Equity returns, whilst providing a lower percentage boost, tend to offer the potential for greater returns than corporate bonds and cash.
Further muddying the ISA water is the fact people pay different rates of tax and investment returns are taxed in different ways. Interest is taxed, for example, at 20% for a basic rate taxpayer and 40% for a higher rate tax payer.
"Taking into consideration how a client's ISA allowance is used or how a stockpile of existing ISA contributions is invested is an extremely valuable service that an adviser can provide," continues Kennedy.
"Few members of the public would have sufficient skills to be able consider this issue. The ISA allowance is limited so getting best use of it can help maximise what returns to the client's pocket."
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