Savings Options
The information below is designed to provide you with a guide for the various types of investments available. It is important that you seek qualified advice from an independent financial adviser before you enter into any agreement.
Types of investments:-
Capital Investment
There are many lump sum products available in which to invest capital, and the choice of such products will depend on your current situation, future aims, objectives and tax position. These factors together with ease of administration, simplicity and attitude to risk are taken into account when considering to invest for either growth or income or both.
Deposit based products
These are suitable for those who want no risk to capital and easy access to their investment, and are particularly suited for emergency or short term funds and also have some attraction to non-tax payers as interest can be paid gross. It is recommended that a percentage of investment is held in such products although there is a risk that if inflation is high the real value of the capital may be eroded.
National Savings
National Savings are directly controlled by the government and offer a wide range of products
Investment Bond
Capital is invested in pooled funds only, real assets such as stocks and shares, gilts and commercial properties. There are many types of Life Investment Bonds all of which offer different degrees of risk to the investor. These bonds can offer particular advantages to investors who may be liable to Capital Gains Tax.
Basic rate tax is paid on income and capital gains within the funds however non tax payers are not able to reclaim tax paid by the company. Bonds should be considered as a medium to long term investment although withdrawals can be taken at any time. The 5% tax free withdrawal facility may be advantageous to high rate tax payers.
Individual Savings Accounts (Personal Equity Plan)
Shares and other direct equity investments held under an ISA are exempt from Capital Gains and Income Tax. ISA’s come in two versions "cash ISA" and "stocks and shares ISA". The maximum cash ISA savings per year is £3600, and the maximum stocks and shares ISA is £7,200 which provide a tax exempt means of investing in collective funds. A combination of the two is subject to an overall limit of £7,200.
Any individual aged 18 and over who is resident or ordinarily residence in the UK may Invest in an ISA.
Unit Trust - OEIC/ICVC
The same investment vehicles as those used for Individual Savings Accounts can be bought without the tax exemption and can provide for future capital growth or income on a collective fund investment basis using Unit Trust, Investment Trusts and Open Ended Investment Company (OEIC)/Investment Company with Variable Capital (ICVC)funds.
Friendly Society Bonds
Friendly Societies can offer policies of which under current legislation premiums of up to £25.00 per month or £270.00 per annum can be invested in funds that are completely exempt from tax. With Profit Investment or Unit Linked options can apply.
Please note not all investments have guarantees.
The value of some investments and the income from them can fall as well as rise. You may not get back the amount you invested. What you get back is not guaranteed, it will depend on investment performance.
