24 Jun 2014
On July the 1st 2014 the ISA limits change to allow up to £15, 000 in cash or stocks & shares.
We thought it would be an idea to show what the difference would be between 2 hypothetical investors.
Mr A has already invested £5940 cash this tax year into the TESCO Bank fixed rate cash ISA that pays out 1.65%. On the 1st of July 2014 Mr A has already decided to invest a further £9, 060 to take advantage of the new allowance this means he will get a total tax free return of £247.50 per year on his £15, 000.
Mr B also has £5490 invested in this tax year in the same TESCO Bank ISA. The difference is that Mr B has decided that he will look at investing £3, 060 into the Tesco ISA and £6, 000 into the FPML Alternatives 3 yr product that pays 12% in year 1, 13% in year 2 and 14% in year 3 (NB Alternative investments are not regulated by the Financial Conduct Authority or covered by the Financial Services Compensation Scheme).**
This means that Mr B will receive £148.50 per year tax free from his TESCO Bank ISA and £780 (average of 13% over 3 years) from his FPML Alternatives product. As the return from alternative investments is liable to tax this reduces the £780 to £624 after basic rate tax is deducted giving Mr B an annual return of £772.50 for his £15, 000 invested.
Over 3 years £15, 000 gives Mr A a total return of £742.50 on his investment.
Over 3 years £15, 000 gives Mr B a total return of £2317.50 after basic rate tax on his investment.
So “To Be or Not To Be” A or B is the question?
"It sounds too good to be true""I Have a Dream"