Do I need to use an Investment Trust for my ISA?

15 July 2021

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Question by Andrew

Baillie Gifford is closing down its Investment Trust ISA and I am being forced to move elsewhere. Do I need to use an Investment Trust for my ISA? What is the best, most tax-efficient way to access Baillie Gifford's Scottish Mortgage where the majority of Investment Trust ISA was held? Many thanks, Andrew

Answered by David Stone

Hi Andrew,

Yes, Baillie Gifford decided not to continue with their direct offering and all customers are being transferred over to Hargreaves Lansdown.

Hargreaves Lansdown have agreed to maintain the old charging structure for 3 years but after that one would revert to their standard (higher) charge structure.

In answer to your 2 specific questions then;
Firstly, you do not need to use an Investment Trust to fund your ISA, they are very flexible these days and permitted assets include ETFs, OEICs, Units Trust, Bonds, Cash and direct Shares.
Secondly, the most tax-efficient way to continue holding the Investment Trust is indeed via an ISA, that way the dividends are tax-free and any profits are exempt from capital gains, furthermore you don’t even have to declare ISA holdings on a tax return which makes life simple.
In summary
If you do nothing, I believe you will end up holding the same investment in an ISA on the Hargreaves Lansdown platform, with the same charging structure for 3 years.

Sometimes the best advice is just to do nothing!

Answered by

David Stone

Managing Director

David started Mansion House Capital with his (now) wife back in 2000, they advise across all areas and mainly look after London-based professionals who are too busy and/or too bored to prioritise planning their own finances. David is a Chartered Financial Planner and Fellow of the Personal Finance Society.