Introduction to GIAs

What is a GIA?

A GIA, or General Investment Account, is an account which allows you to hold investments outside of tax wrappers, such as ISAs or pensions. Unlike ISAs, there is no limit to how much you can invest in a GIA. They are therefore, ideal for those who have used up their ISA allowance and who have more to invest. There are no restrictions on when you can access money invested in a GIA, although you should generally look to invest for at least five years.

You can invest in a wide range of funds, shares, investment trusts and exchange traded funds (ETFs) and there are no restrictions as to when you can take your money out.

You can also use money you hold in a Willis Owen GIA to pay the service fee on your Willis Owen ISA if you have one. This can help to make best use of your tax-free ISA allowance.

Tax implications

Any dividends received from your GIA investments that exceed your annual, tax-free dividend allowance or available personal allowance will be subject to income tax. The rate of income tax payable on dividend income depends on the overall level of your income. Income tax may be payable whether you choose to receive dividend income or to reinvest it.

Basic rate taxpayers currently pay income tax at 7.5% on dividend income. Higher rate taxpayers pay 32.5% and additional rate taxpayers pay 38.1%. The first £2,000 of dividend income in a tax-year is currently tax-free.

Over and above your personal income tax allowance, any interest received from investments held in a GIA may be subject to income tax whether or not interest is automatically reinvested. Basic rate taxpayers can currently receive up to £1,000 of interest in a tax-year without paying income tax whilst higher rate taxpayers can receive £500. This is called the personal savings allowance and it’s not available to anyone who pays additional rate taxpayers.

If a gain is made as a result of selling, or otherwise disposing of investments within your GIA and the amount of the gain exceeds your available capital gains tax allowance, capital gains tax will be payable. The rate of capital gains tax you may pay depends on the level of your income and is currently 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers.

You will normally need to complete a tax return if any tax is due.

Investments you hold within a GIA will form part of your estate when you die and may therefore be subject to Inheritance Tax.