Contents:
Friendly Society Tax Exempt Savings Plans
Individual Savings Plans (ISAs)
Ethical Investments
Offshore Investments
TESSA-ISAs
Collective Investments
National Savings
Individual shares
Friendly Society Tax Exempt Savings Plans
These are investment products that are essentially the same as an endowment policy, but there is no tax to be paid at the maturity of the policy. The value of the 'with profits' version is that the plan should grow each year in line with the addition of bonuses. You can invest up to £25 a month, tax-free.
| Deposit Component | plus | Insurance Component | plus | Stocks & Shares Component | |
| Up to £3000 | UP to £1000 | Balance up to £7000 | |||
| Mini ISA | Up to £3000 | Up to £1000 | Up to £3000 |
The interest payable on a deposit ISA is paid gross without any liability for income tax. The stocks and shares and insurance components are free of capital gains tax. Until April 2004 the ISA manager can reclaim a 10% tax credit on UK share dividends, after 2004 no reclaim will be possible. The tax regime for ISAs is guaranteed to continue until at least 5 April 2009 with a review due in 2006.
CAT STANDARDS
CAT Standards are determined by the Government and stand for Charges, Access, and Terms. It is not compulsory for ISAs to meet CAT standards, but they are intended to be a badge of good value and fairness. It is not a guarantee of investment performance.
You could have failed to notice the various ISA offerings from investment, and insurance companies. There are literally thousands of ISAs and funds to chose from, and not a small number of companies. Selecting an ISA that meets your requirements is therefore no easy task.
· Unit Trusts
· Open Ended Investment Companies
(OEICS)
· Individual savings Accounts (ISAs)
· Regular Savings Plans
· Investment Trusts
· Investment Bonds.
It used to be that offshore products was only for the wealthy, and expatriates, this is no longer so. Individuals with modest incomes can still benefit from offshore products. The range of offshore products are as wide ranging if not more so than the offerings in the UK. The range would include:
· Investment Bonds
· Regular Savings Plans
· Private Medical Insurance
The ISA rules allow you to re-invest the capital of your maturing TESSA (tax-exempt Special Savings Account) up to the maximum of £9,000 into a TESSA ISA, in addition to any other ISAs you hold, as long as you move the maturity capital (not the interest) within six months.
These are investments whose performance can go down as well as up. They can carry a certain amount of risk and should be used for long-term planning of at least five years, not short-term growth. First use up your ISA allowance before investing outside the tax sheltered wrapper.
1. They are growth shares, which pay no dividend during their lifetime so you pay no income tax on them.
2. When the zero matures, typically after up to seven years, there will only be Capital Gains Tax to pay if the gain is above the CGT limit (£7,500 in 2001/2002-tax year).
3. You can stage them to mature at the times you know you will need the money. It is important to be aware that there is no guarantee that zeros will pay out at maturity.
There are many types of national savings available suitable for different people e.g. Children's Bonus Bonds and Pensioner Bonds. As the rates of return change regularly, and the tax-treatment varies from product to product. We can advise you as to which National Savings product is suitable for you.
Any investment in stocks and shares need a long enough lead-time to iron out any stock market volatility. Try to use up all your tax-free allowances by placing your shares in an ISA first.
Investment bonds have no overt income. You can take 5% of your original investment for up to 20 years free of immediate tax until you cash them in. Then the 'chargeable gain' is divided by the number of years you have held the bond (called 'top slicing') and charged against your income tax rate at the time. But there is no tax to pay unless you are a higher ratepayer, then you pay tax at 18%. As with most investments, the longer you hold them, the better your return is likely to be. Be aware, any investment period less than five years is unlikely to show you a decent profit.
The investment types listed above can be used for income or growth, or a combination of the two, according to your needs and time-scale. We can suggest which type of investment is suitable for you.
Anthony Chambers Limited (registration no 3985717) is an Appointed Representative of Financial Solutions 2000 Ltd, 136 High Street, West Wickham, Kent, BR4 0LZ, which is authorised and regulated by the Financial Services Authority
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