With less than a week to go until the deadline for using your 2013/14 Investment ISA allowance (£11,520), this is your last opportunity to protect your returns from the taxman. If you are yet to make use of this valuable tax break, we let you know where investors are putting their money by bringing you our Top 5 most popular Investment ISA plans.
Conditional capital protection
These plans offer some protection of capital against a falling market since they all include conditional capital protection. This means that your initial capital is returned at the end of the investment term, as long as the FTSE has not fallen below a specific level (e.g. 3,900 points) or a percentage, normally 50% of its value at the start of the investment.
Your capital will be at risk if the Index does fall below the defined level, in which case your initial capital will be reduced by 1% for each 1% fall and so you could lose some or all of your initial investment.
1. 6% fixed income each year, monthly payments
Top of the list is the Enhanced Income Plan from Investec which pays a fixed income of 6% per year (paid as 0.5% each month) regardless of what happens to the FTSE. Capital is at risk if the FTSE falls by more than 50%.
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2. 9.5% each year even if the FTSE only rises 1 point
Investec also offer our most popular growth plan with their Enhanced Kick Out offering the potential to mature early and return 9.5% for each year the plan has been in place (not compounded). The plan has a maximum term of six years but will mature early if the FTSE at the end of each year is higher than its value at the start of the plan, from the end of year one onwards. Capital is at risk if the FTSE falls by more than 50%.
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3. 7.25% income provided the FTSE remains above 3,900 points
The Enhanced Income Builder from Gilliat accrues income for each Friday during the term that the FTSE 100 Index closes above 3,900 points – if it closes below this level, no income will be added for that week. All accrued income is then paid out each quarter. Capital is at risk if the value of the Index on the last day of the investment is below the same 3,900 point barrier.
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4. 7% each year even if the FTSE falls up to 10%
For those looking to take a more defensive view of the FTSE, Investec’s Defensive Kick Out Plan offers to return 7% per year (not compounded) provided the FTSE has not fallen by 10% or more at the end of each year (from year 2 onwards). Capital is at risk if the Index falls by 50% or more.
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5. 2.4 x any rise in the FTSE above 90% of its starting value (72% cap)
Defensive plans have proved popular recently and the FTSE Defensive Supertracker from Morgan Stanley offers well over double any rise in the FTSE over the term measured as any growth above 90% of its value at the start of the plan (subject to maximum growth return of 72%). That’s a 24% return even if the FTSE stays the same level. Capital is at risk if the FTSE falls by more than 50%.
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How to apply
When you click for more information on any of the above plans you will be able to request a brochure pack which will be sent to you by post and email. With the 2013/14 ISA deadline imminent, you may not receive the postal pack in time so if you wish to proceed, we recommend you print and complete the application form contained within the email brochure pack attachments. The minimum investment for all of the above plans is £3,000. Arrangement fees apply.
Important note – don’t miss out
Please be aware that in order to process completed 2013/2014 ISA application forms in time they must be received by us no later than Thursday 3rd April 2013 and so the use of next day delivery services should be considered.
Remember that all of the above plans allow you to apply for next year’s Investment ISA allowance at the same time (2014/15 tax year, current limit of £11,880) and they also accept non-ISA investments. If you have any questions on how to apply please contact our Customer Services team on 0845 308 2525.
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No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice. Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future.
These are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.
