By ADRIAN LOWCOCK 17/03/2009
It is not surprising that when an economy lies in tatters the last thing on peoples’ minds is whether or not to use their ISA allowance.
Experience tells us that investments made when things are at their worst, are by far and away the most profitable. Over the past 12 months, I have often come across investors who have been content to secure their capital and remain as onlookers to the storm in the markets, waiting until news becomes more positive. However, attempting to time the market is a risk in itself, as we won’t ever know we have reached the bottom without the benefit of hindsight. By that time, substantial recovery opportunities will have been missed. It’s not the timing of the market that’s important – it’s the time in the market.
The Government do not offer many tax breaks, and with Cash ISAs offering Tax-Free returns and Stocks and Shares ISA offer significant tax advantages they should be considered a first port of call for an investor. ISA are a case of use it or lose it. For example, a higher rate tax-payer receiving £100 interest from a corporate bond would see this reduced by £40 outside of an ISA, but not a single penny is taken if it is wrapped up inside an ISA.
With four out of five people (81%)* claiming they have not done anything to reduce their tax payments the need for individual tax planning has never been greater. ISAs are the simplest way to protect your savings and investments against tax.
Even if you don’t want to commit new money to an ISA this year you can still protect your existing holding from tax. This process is called ‘Bed and ISA’. We can help arrange this for you but it takes a little time. To be able to process ‘Bed and ISA’ transactions we will need the paperwork to be with us by the 27th March.
There are a huge number of benefits of taking out an ISA.
- Tax free growth – No capital gains tax on your allowance
- Tax free interest on cash and corporate bond income ( reinvesting the income can make a massive difference to your returns)
- Interest can be paid out free of any additional tax, making it more attractive than pension income
- Avoid future tax increases by the government
- Income yields of up to 13%.**
Benefits of an ISA through us
- No annual administration fee on our Funds ISA - at Bestinvest we believe in making investment accessible to everyone.
- Free investment advice (for portfolios over £50,000)
- No initial commission on our top rated funds – we prefer to build long term client relationships and therefore offer discounts on investments
- Consolidated Valuations
- Less Administration
- Access to over 1,100 different funds covering all major asset classes
- Access to our award winning research
- Online dealing
- Access to our Investment experts on 020 7189 9999
* unbiased.co.uk 2009’
** Fidelity International 2009’