Investment planning; FCA research reveals increase in cryptoasset ownership and more.

Contents:

• CGT free gilts
• ISA statistics highlight continued popularity of cash ISAs
• FCA research reveals increase in cryptoasset ownership

 

CGT free gilts

(AF4, FA7, LP2, RO2)

HMRC has updated its list of gilt-edged securities which have a redemption date on or after 1 January 1992, disposals of which are exempt from tax on chargeable gains under section 115 of the Taxation of Chargeable Gains Act 1992

Gilt-edged securities or gilts are UK Government loan stock. Since 2 July 1986 all disposals of gilt-edged securities have been exempt from capital gains tax (CGT).

The formal definition of gilt-edged securities is in TCGA92/SCH9/PARA1. They are:

• securities listed in Part II of Schedule 9. This includes all securities which were listed up to April 1992;
• securities which are specified by Treasury Order. These are securities which have been issued since April 1992.

HMRC updates this list each time a Treasury Order specifies further exempt gilts. You can see the latest list here.

 

 

ISA statistics highlight continued popularity of cash ISAs

(AF4, FA5, FA7, LP2, RO2)

The latest HMRC statistics on ISA investment have been published, showing that substantial funds are held within cash ISAs.

HMRC recently updated their ISA statistics to include data for 2019/20. These have emerged later than normal because of the pandemic, so are unusually dated, even by HMRC standards. To the extent that they capture the pandemic, it will be in the last few tax year end weeks of 2019/20, as the first lockdown started. This means the final April 2020 valuations for stocks and shares ISAs coincide with a time when the FTSE 100 was around 5,600.

With these important caveats in mind, the main highlights from the latest (sic) data include:

• The total number of adult ISA subscriptions rose by 16.6% in 2019/20, the second successive year of an increase after five years of declines. There were 13.009m subscriptions in 2019/20 against 15.246m at the peak in 2010/11. The cash component subscription numbers rose by 14.5%, while stocks and shares subscriptions rose by 12.5%. Cash ISA subscriptions outnumbered stocks and shares by 3.6:1, despite ultra-low interest rates.

• Lifetime ISA (LISA) subscriptions more than doubled to 545,000, no doubt helped by the closure of Help to Buy ISAs to new investors from December 2019.

Innovative Finance ISAs remained small beer with just 34,000 subscriptions, down 4,000 on 2018/19. The saga of London Capital & Finance did not help the sector.

• The total amount subscribed rose to £74.64bn, up 10.6% on 2018/19, but still 10.3% below the 2014/15 peak (when the subscription ceiling was 25% lower at £15,000). Year-on-year, the cash component saw a 10.9% increase in subscriptions to £48.745bn, while the stocks and shares component rose by 7.0% to £24.2bn. LISAs attracted £1.26bn, while the Innovative Finance ISA figure was only £0.438bn – less than 0.6% of the total ISA investment.

 

• Average cash component subscriptions fell 3.2% to £5,024 while the average for stocks and shares fell by 4.9% to £9,331. The average LISA subscription was £2,709.

• Junior ISAs (JISAs) fared less well, with a 7.2% rise to 1,023,000 account subscriptions, but the total amount subscribed dropping by 0.3% to £971m. Most accounts (69.0%) and amounts (61.5%) were the cash component.

• In terms of total investment (outside JISAs), £313.5bn was held in cash and £305.3bn in stocks and shares as at April 2020. After largely flatlining since 2015, the cash figure rose by 16% in 2019/20. Combined with market movements, the result was that the value of the cash component exceeded the stocks and shares component (£305.3bn) for the first time since 2015/16.

• JISAs accounted for £5.37bn, of which 40% was held in cash.  

The continued popularity of cash ISAs and the substantial funds held within them are a reminder of the lack of advice in the ISA market and the opportunities available.

 

 

FCA research reveals increase in cryptoasset ownership

(AF4, FA7, LP2, RO2)

According to research published by the Financial Conduct Authority (FCA), an estimated 2.3 million adults now hold cryptoassets - up from 1.9 million last year.  

The research shows that peoples attitude towards cryptoassets have changed - 78% of adults have now heard of cryptoassets, up from 73% in a year and while 38% of crypto users regard them as a gamble (down from 47% last year), increasing numbers see them as either a complement or alternative to mainstream investments.   

What is worrying is that the level of overall understanding of cryptocurrencies is declining with only 1 in 10 saying they were aware of consumer warnings on the FCA website – 43% said they were discouraged from buying crypto. Most consumers recognise that crypto investments are not protected, although 12% of crypto users believe otherwise.  

While more individuals are investing in cryptoassets, these investments are considered high risk so consumers could lose all their money and so they ought to be fully aware of this. 

 

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