General Investment Accounts (GIAs), Unit Trusts and Open-Ended Investment Companies (OEICs) are collective investment schemes which allow individuals to participate in a large portfolio of assets by pooling their money together with other investors.
This gives the individual access to a much wider spread of holdings than can normally be achieved with smaller sums of money, which in turn reduces the risk.
The fund is divided into units or shares, which are valued on a daily basis and reflect the underlying value of the fund. This value will fluctuate on a daily basis with market conditions.
GIAs, Unit Trusts and OEICs are a flexible and relatively cheap way to invest in the stock market. To be eligible to invest in a unit trust/OEIC, an investor must be 18 years of age or over. An investment can also be made by a company or trustee(s). The minimum monthly contribution is normally £25-£50 and the minimum lump sum is £500-£1,000; there is no maximum limit.
When a holding is surrendered, if there is a gain, this is subject to capital gains tax. However, each individual has an annual allowance, and as long as the gain together with any other gains you may have in the same tax year is less than the allowance, there is no tax to pay.
Any gain in excess of the annual allowance will be taxed at a rate of 10% if, after adding the net taxable gain to your taxable income in the relevant tax year, the total falls within the basic rate income tax band. A tax rate of 20% applies to gains or parts of gains which exceed the upper limit of the basic rate income tax band.
The majority of these types of investments can be sold at any time, however some assets such as property may have a notice period; you can make partial withdrawals or encash your full investment.
Past performance is not a reliable indicator of future results