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Is this
product
right for you? |
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Yes ,
I am happy to invest because:
• I want to know my original money is protected provided
that I leave it for the full term
• I want the opportunity to receive a return greater than
that provided by an ordinary deposit account at the end of
five years
• I appreciate the need to diversify my
investment portfolio
• I like the idea of participating in an investment which
links my returns to new markets
• I am unlikely to need access to my money over the next
five years
• I want the option to invest and receive tax-free returns
on my money
• I have a minimum of £3,600 to invest |
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No ,
this plan probably isn’t right for me
because:
• I don’t want to risk investing into an
area I know little about
• I will probably need access to some of my money over the
next five years and I cannot risk getting back less than I
invested; I don’t have enough spare money to cover any
unexpected emergencies
• I want a regular income from my money
• I am a regular saver and I prefer to be able to add to my
investments from time to time
• I don’t want to risk getting back no return at all or less
than I would have done if I had invested in an ordinary
deposit account.
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Things to consider
Access to your money will be restricted
You should only invest in the Emerging
Markets Optimiser Plan if you are sure that you will not
need to access your invested capital over the investment
term. If you withdraw early, you are unlikely to receive
back the full amount you originally invested.
Investing in this product is not the same as investing
in shares
Payment of the investment returns
depends upon the performance of the iShares MSCI
Emerging Markets Index Fund and the varying exposure to
the fund throughout the term of the investment. Part of
the return on the fund is via receipt of dividends from
companies that comprise the Index. This is not expected
to be significant in any final return.
Will I get an income?
No, the objective of the plan is to
provide capital growth and, at the same time, your
capital is protected provided you hold the investment
for the full term.
You need to consider inflation
Remember, whatever payment is made when
your plan matures, inflation over the investment term
will have reduced the value of what you receive.
How does the Emerging Markets Optimiser Plan compare to a deposit account?
A deposit account is usually seen as the
safest form of investments and normally allows
you ready access to your money. However, it
provides no opportunity for your capital to grow
as cash deposits only pay interest. In addition,
the income generated by deposit accounts is dependent upon interest rates and these
can vary with the general health of the
economy. In an environment of low interest rates,
the returns from cash deposits can be
correspondingly low especially once tax is taken into
account. In contrast, this investment does not offer
a regular income but provides the opportunity for
capital growth. Of course, the plan might still
provide less return than a deposit account would
have done, or no return at all.
Will I have to pay tax?
If you invest directly into the plan
(outside of an ISA) the returns will normally be
subject to Capital Gains Tax (CGT). Gains subject to CGT can be reduced by
taper relief and offset against your CGT
exemption in the year of maturity. All UK resident
individuals have an annual CGT exemption (for
2007/08 it is £9,200) which means that the total of
gains made by an individual up to this amount
in a tax year will be free of CGT. This could
include the gains made under the plan in the year of maturity.
Any gain achieved in excess of this amount is liable to
tax at your highest Income Tax rate in the year when the
plan matures (which at current rates, could be up to
40%). Any gain which is subject to CGT can be reduced
through the use of taper relief where holding the plan
to maturity can reduce the amount assessable for tax by
15%.
However in the Chancellor’s Pre-Budget speech to
Parliament on 9 October 2007, he stated that legislation
will be introduced, effective 6 April 2008, to give a
new single rate of charge to CGT equal to 18% and that
taper relief would be withdrawn.
If you invest in an ISA there will be no further
obligation on you to pay tax: all ISA investments and
PEP transfers are tax efficient.
The rates of tax and allowance quoted are those applying
in the 2007/08 tax year. These rates and the basis of
taxation may change.
What are the implications of investing via an ISA?
There are two main types of ISA – the
Maxi ISA and the Mini ISA. Stocks and shares (such as
the investments within the Emerging Markets Optimiser
Plan) and cash can be invested into a Maxi ISA or Mini
ISAs. Investors can have one Maxi ISA or up to two Mini
ISAs (one Stocks and Shares Mini ISA and one Cash Mini
ISA) in any one tax year, providing they do not exceed
their annual allowance – for the 2007/08 tax year this
is £7,000. All ISA investments are tax efficient.
You can only use your ISA allowance once in any tax
year, so if you use it to invest and later decide to
withdraw your money, you will not be able to invest in
another ISA for the same tax year.
Similarly, if you invest less than £7,000 in a Maxi ISA
you will lose the remainder of your allowance for the
tax year. It is important to remember that the
favourable treatment of ISAs might not continue.
Existing ISAs may lose their tax advantages and new ones
might not be permitted. Although the current Government
has stated that it sees ISAs as part of the Government’s
primary savings vehicle outside pensions. The value to
you of any favourable tax treatment depends on your
individual circumstances.
You should bear in mind that tax rules can change.
As a new ISA, the Plan is only available as a Maxi ISA.
Please refer to the Brochure and the Terms & Conditions for full
details. |
