friendly societies?

baxbya

I heard you can invest 25pound a month tax free for 10 years in friendly society, on top of ISA allowance.

can anyone recommend any? Or is there a better alternative?

thanks folks :money:

Reaper

Type "friendly society" into the forum search and you will see plenty on the subject. In brief their high charges make them unattractive. Have you used up your Stocks & Shares ISA allowance? And your annual capital gains allowance? If not you still have plenty of tax free options.

jimjames

Plenty of better alternatives. Tax free is irrelevant for most people unless you are higher rate tax payer or making more than £10000 of gains PER year.

If you have filled your ISA then Investment trust savings schemes are very good value and you have complete control over the payments and where you invest unlike friendly societies.

Loughton_Monkey

Friendly Societies are extremely expensive, and not really aimed at people coming out of the 'top end' of ISA's.

Cautious_Investor_3

jimjames wrote: »

Tax free is irrelevant for most people unless you are higher rate tax payer or making more than £10000 of gains PER year.

I'd agree that fruendly socities charges are high but why is "tax free" not relevant for basic rate taxpayers?

The Cautious Investor

jimjames

Cautious_Investor wrote: »

I'd agree that fruendly socities charges are high but why is "tax free" not relevant for basic rate taxpayers?

The Cautious Investor

Friendly Societies seem to use the "tax free" badge to imply that their plan gives something special worth taking advantage of but for most people investing the amounts mentioned this isn't the case.

A basic rate taxpayer will have no extra income tax to pay on any returns from non ISA investments (assuming it doesn't take them into the higher rate band) and they need to be making gains of more than £10,000 per year before they would pay capital gains tax.

As such the people saving the amounts that these plans are aimed at would on the whole make no difference if their investment was taxed or not.

Something like an investment trust savings plan that could be taxed if you made enough money but has very low charges and can be started and stopped or money withdrawn at any time would be far better value for people that these are aimed at.

A recent thread here by someone who had a friendly plan just maturing was showing that the return after 10 years was barely what had been paid in as a result of the poor investment return and high charges. Even a FTSE tracker would have given a higher positive return over the last 10 years and that is with one of the worst market performances for a long time.

dunstonh

A a £1500 balance on a typical asset mix, the annual tax free savings element is worth about £3.60. The higher charges on this compared to unwrapped unit trusts would wipe out that small tax gain with some to spare.