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Category Archive Savings

Bydylanbbd

2021 Budget Review

After a year of Covid-19 restrictions, the 2021 Budget had a lot of ground to cover. There has been considerable speculation over how the extra expense of the furlough scheme, funding the NHS and supporting those out of work would be paid for.

It was also questionable whether the current package of support for individuals and businesses could be sustained.

So what are the plans for recovering from the pandemic and rebuilding the economy? Read about the Chancellor’s budget overview in our latest publication, download it here.


If you would like to find out more information or would like to start investing today, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

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MAP Spring 2021 Budget Highlights

Check out our highlights of the Spring 2021 Budget from 3rd March 2021 using the reader below.

2021-Spring-Budget

If the above reader does not display correctly, you can access the guide by clicking here.

Bymapfinancesadmin

MAP Newsletter – Quarter 4 2020

Check out the latest financial insights for the final quarter of 2020 using the reader below.

If the above reader does not display correctly, you can access the newsletter by clicking here.

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MAP Newsletter – Quarter 3 2020

Check out the latest financial insights for the third quarter of 2020 using the reader below.

If the above reader does not display correctly, you can access the newsletter by clicking here.

Bymapfinancesadmin

MAP Spring 2020 Budget Highlights

Check out our highlights of the Spring 2020 Budget from 11th March 2020 using the reader below.

2020-Spring-Budget

If the above reader does not display correctly, you can access the guide by clicking here.

Bymapfinancesadmin

MAP Newsletter – Quarter 2 2020

Check out the latest financial insights for the second quarter of 2020 using the reader below.

If the above reader does not display correctly, you can access the newsletter by clicking here.

Bymapfinancesadmin

Offshore Investment Bonds

Offshore Bonds are collective investments in which the investments of many individual investors are pooled. They are technically single premium life assurance contracts and therefore normally have nominal life cover attaching, however they can also be written on a capital redemption basis without a life assured. A wide choice of funds is available ranging from managed to specialist funds.

A number of companies market offshore life policies, particularly single premium bonds. The most popular are those issued by subsidiaries of well known UK life offices in countries such as Luxembourg, the Republic of Ireland, the Channel Islands and the Isle of Man.

The income and gains of an offshore bond fund will normally be free of tax in the relevant jurisdiction. Hence they are often referred to as benefiting from “gross roll-up”.

Whilst there will normally be no tax in the particular tax haven that the insurer is based, the fund is likely to suffer some withholding taxes on its underlying investments. There may be scope to reclaim some of the tax under double taxation agreements but it is unlikely that an offshore fund with equity content will ever be truly gross.

The ability to defer tax is greater under an offshore bond than an onshore bond, therefore the longer it is held the greater the compounding effect of the tax deferment. All things being equal an offshore fund will create a greater return than an onshore one over the longer term. However, the greater the level of withholding tax and management expenses (an offshore fund has no tax from which it is able to deduct management expenses) the less an individual will benefit from gross roll-up.

To be eligible to invest in an investment bond, an individual investor must be 18 years of age or over. The investment can also be made on a joint basis, or by a company or trustee(s). The nominated life (lives) assured is usually the applicant/investor but could also be an individual aged under 18.

The minimum lump sum is usually £5,000 but this may be higher or lower depending on the provider. The maximum limit will be set by the provider.

Offshore bond gains are liable to tax and the rate will depend on the policyholder’s personal tax position. The personal allowance, the starting rate band for savings income and the personal savings allowance can all potentially be offset against offshore bond gains to receive some or all of the gains tax free.

Past performance is not a reliable indicator of future results

Bymapfinancesadmin

Onshore Investment Bonds

An investment bond is technically a single premium life assurance contract although the life cover aspect is only nominal.

Bonds are collective investments in which the investments of many individual investors are pooled. This pooling enables relatively small investors to benefit from the economies of scale made available to institutional fund managers.

A wide choice of managed, general and specialist funds are available offering investment opportunities in equity, property and fixed interest securities. Bonds enjoy the facility to switch between these internal insurance company funds at a reasonable cost if desired. Although classed as single premium investments, ‘top-up’ facilities are offered, allowing further amounts to be invested either on a regular or ad-hoc basis.

To be eligible to invest in an investment bond, an individual investor must be 18 years of age or over. The investment can also be made on a joint basis, or by a company or trustee(s). The nominated life (lives) assured is usually the applicant/investor but could also include an individual aged under 18.

The minimum lump sum is usually £5,000 but this may be higher or lower depending on the provider. The maximum limit will be set by the provider.

The underlying funds of Investment Bonds are subject to tax within the fund on income and gains (after indexation). Any ‘income’ you need is achieved by selling units.

Investors also benefit from the ‘5% rule’ which allows them to withdraw up to 5% of the initial premium each year (until such time as all of the original investment has been withdrawn) with no immediate personal tax liability, making it particularly attractive to higher and additional rate taxpayers.

Past performance is not a reliable indicator of future results

Bymapfinancesadmin

Structured Products

Structured products is the name given to a group of investments designed to deliver a known return for given investment circumstances and combine two or more underlying assets in order to offer growth or income potential, whilst usually offering some degree of capital protection.

Such investments normally share the following characteristics:

  • Fixed terms, meaning they are not as liquid as deposit accounts or investments in equities;
  • All of the return or interest only is linked to the performance of stock market indices;
  • Enhanced returns available because of the additional risk taken;
  • Growth or income options, or both, are available;
  • Can be held within a variety of product wrappers including ISAs;
  • Varying degrees of capital protection may be available; and
  • Offered only for a limited period and for a limited amount of funds.

A structured product can take two forms – a structured deposit and a structured investment. Structured deposits and structured investment products with some capital protection are often purchased by those looking for alternatives to saving accounts and other deposit-based products.

These products offers growth linked to stock market performance – usually via an Index, such as the FTSE 100 Index, although the amount of return you may receive is sometimes capped.

Some structured products expose your capital to risk, although these plans are often set up with a “safety net feature”, which means the stock market can fall by a certain percentage without affecting your capital return.

You should not invest in structured products if you might need access to your funds during the term of the product. If you do encash prior to maturity, heavy penalties will be incurred and you will receive back significantly less than you have invested.

There are no specific limits on the level of investment other than those that may apply to the wrapper (i.e. ISA or SIPP) for the investment. Also, providers may set their own minimum levels of investment per application.

Past performance is not a reliable indicator of future results

Bymapfinancesadmin

Investment Trusts

Investment trusts are a type of collective investment. They are structured as companies and exist purely to invest in a portfolio of shares and securities in other companies to make money for their own shareholders.

They pool investors’ money and employ a professional fund manager to invest in the shares of a wider range of companies than most people could practically invest in themselves. This way, even people with small amounts of money can gain exposure to a diversified and professionally run portfolio of shares, spreading the risk of stock market investment.

Investment trusts are what is known as closed-ended funds. This means that the amount of money which the trust raises to invest is fixed at the start by issuing a set number of shares to investing shareholders. Every selling shareholder must first be matched to a potential buyer via the stock market before a transaction can take place. Having a fixed pool of money enables the fund manager to plan ahead.

Trusts often specialise in particular sectors and types of company. Some might specialise, for example, in communications companies, or alternative energy producers. Others specialise in companies from different parts of the world.

Trusts also specialise in what they aim to give their shareholders. Some try and maximise income. Others aim exclusively for capital growth over the long term. Some trusts aim to provide a combination of income and capital growth. All trusts have investment objectives that will be clearly stated in their literature.

Investment trusts can borrow to purchase additional investments. This is called ‘financial gearing’. It allows investment trusts to take advantage of a favourable situation or a particularly attractive stock without having to sell existing investments. The idea is to make enough of a return on the investment to be able to pay the interest on the loan, repay it and then make a profit on top of that. Obviously, the more a trust borrows, the higher risk it’s taking – but the greater the potential returns.

To be eligible to invest in an investment trust, an individual investor must be 18 years of age or over. An investment can also be made by a company or trustee(s). The minimum monthly contribution is normally £100 and the minimum lump sum £500-£1,000. There is no maximum limit.

Most investment trusts allow shares to be sold at any time. You can make partial withdrawals or encash your full investment. The tax treatment is described above.

Past performance is not a reliable indicator of future results