Mini ISA - Stocks and Shares ISA

djblamire

I invested in one of these about 2 years ago. It offered a guaranteed 120%
of my investment back after 5 years, plus the chance of up to 40% on top
(depending on the stock markets).

Anyone know if there is anything similar available at the moment ??

I haven't yet invested in my Stocks & Shares component this tax year.

Thanks in advance,
Daniel

dunstonh

Yes there are a few of these available at present. I dont have any details to hand though as to the terms.

isasmurf

If they are they'll probably be Cash ISAs. Any Stocks & Shares ISA that guarantees at least 95% return of capital within 5 years is classed as a Cash ISA.

lipidicman

isasmurf wrote:

If they are they'll probably be Cash ISAs. Any Stocks & Shares ISA that guarantees at least 95% return of capital within 5 years is classed as a Cash ISA.

They sounded good until I found this out
So is the best bet to forget the ISA bit and go GEB from ns&i?
Though I believe these are taxed as income not capital gains for a similar reason

djblamire

The one I have now which guarantees a minimum of 120% return, is definitely classed as a Stocks & Shares ISA.

Thanks
Daniel

dunstonh

A number of the currently available ones use the MAXI £7000 limit and therefore cannot be classed as cash ISAs.

I hadn't heard of that guarantee/CASH ISA rule before and have not been able to find any reference to it (after a quick check on google). Can you provide a reference to it please?

djblamire

I believe 'Keydata' do some, but they are only available via an IFA. - Not direct.

Daniel

MJSW

http://www.inlandrevenue.gov.uk/isa/bulletin12.pdf

"The 5% test

From 17th November 2003 all units or shares acquired in relevant UCITS, Chapter 5
UCITS, securities schemes, warrant schemes and fund of fund schemes will be subject to the 5% test. Any units or shares that pass the 5% test qualify for the stocks and shares component of the ISA , and the PEP. Any that would have qualified for the stocks and shares component of the ISA but fail the test qualify instead for the cash component of the ISA.

The test applies to the capital return expected by the investor. The test is applied at the date of purchase of the units or shares into the ISA or PEP, and at no other time. If the investor is certain or near certain of receiving back 95% or more of their initial
investment at any time during the 5 years after purchase (that is the investments are not exposed to a risk of loss of at least 5%) then the test is failed."

lipidicman

So this would eliminate gilts, would it?

MJSW

No it doesn't eliminate gilts, because the above rules only apply to unit trust and similar schemes, not to direct investments in gilts. It could potentially affect gilt and bonds unit trusts, but only if they guarantee an investor at least 95% of their money back within the 5 years.

You can't purchase gilts (or bonds) with less than 5 years to run in an ISA anyway. So the guaranteed return could never happen within 5 years on a gilt held in an ISA. The market value of a long dated gilt could easily fall more than 5% in the first 5 years.

I suspect the reason some of the 'guaranteed schemes' can continue to exist is because it only applies to a guarantee within 5 years. If you want a guaanteed scheme to be allowed, you just set the guarantee to apply after 5 years and a day, and that appears to be acceptable.

dunstonh

ahhh. That explains it. Most of the guaranteed schemes are not unit linked.