Investments
There are numerous types of investments ranging from National Savings products to Unit trusts, Investments Trusts, Stocks and Shares to name but a few.
However, one of the most important areas to consider is tax efficient investments. This should mean making Individual Savings Accounts (ISAs) the top investment priority for the vast majority of people. The maximum contribution limit for ISAs in the tax year is £7,000 and this scheme has been extended to run until 2010. You can make a monthly contribution for as little as £25.00
Unless you have to wait until late March 2001 for some special reason, the "Closing down" rush makes little sense:
- There is some anecdotal evidence that the surge in demand has pushed up UK stock market prices around the turn of the tax year. Of course this might not happen in the future.
- The late investor misses out on movement in their chosen investment market during the year. For example, between 31st March 1999 and 31st March 2000, the total return in the UK market, as measured by the FTSE All Share, was just under 10%, although markets can and do decline over a 13 month period.
- A year's worth of freedom from income and capital gains tax within an ISA could be wasted. If you are a higher rate tax payer investing in a high yield corporate bond fund within an ISA, then a years delay could mean losing significant income tax benefits.
- Administrative glitches are considerably more common when new ISA volumes are at their peak.
The arrival of ISAs meant that no new contributions may be made to Personal Equity Plans (PEPs).
However, existing PEPs continued to enjoy freedom from UK income tax and capital gains tax, as well as the ability to reclaim the 10% tax credit on UK dividends until 5th April 2004.
If you accumulated different PEPs over the years, it would make sense to review your holdings. Your previously chosen PEP funds may not be the right ones.
For more information on this subject. Please visit the Money Group at http://www.moneygroup.co.uk/contact_us.html
