Up to 10.33% gross on tax efficient savings

isasmurf

I was going through my press cutting this morning and spotted an article on something called The Charity Bank whom offer an account where it is possible to get 10.33% return on your deposits!

The Charity Bank is an approved Community Development Finance Institution (CDFI) and offers an account called Community Investment Tax Relief Account (CITRA). I never knew of this Tax Relief scheme and haven't done too much digging yet. Perhaps Martin might like to look into this or if other Moneysavers have experience of this they can let us know.

This is what I know so far. The aim of the bank, as suggested in the name, is to help Charities. Every penny you deposit will be lent to a charity to use. They have a number of accounts, but the one most appealing is the CITRA. You deposit a minimum of £1,000 with the bank. Each year for the duration of the account life you can claim tax relief equal to 5% of your deposit. You must declare this to the taxman yourself, either through you tax return or by requesting a change in your PAYE code. To get tax relief your money is invested for 5 years, although you can get access to some of it in years 3 and 4 this will reduce the amount of tax relief you get.

The 5% tax relief equates to 8.33% gross for a higher rate taxpayer, or 6.4% for a basic rate taxpayer. In addition you can choose to receive between 0% and 2% of interest on your deposit. If you choose 0% the Bank can offer lower rates to those borrowing money. You can choose to receive this interest yourself, or give it to charity and by claiming gift aid increase the amount donated by 28%.

Amazingly there is no upper limit on the amount an individual can save, although the Bank itself is limited to deposits equal to £10million in tax relief at any one time.

This is too good to be true surely? What am I missing?

MSE_Martin

No it's very good. I'm currently writing a full deal on it for publication in about two weeks

dealseeker

Looks good to me. Will have to spend time to find out or perhaps wait on Martin's article for the complete low-down....

From their site http://www.charitybank.org :

How come I haven’t heard about it before?
Because it is a relatively new scheme. It received parliamentary assent in early 2003 and the first CDFIs were accredited in March 2003. Charity Bank was one of the first CDFIs to be accredited. The Just Interest accounts were launched in 2004.
What happens if Charity Bank’s loans fail? Is my capital at risk?
Obviously there is no guarantee that all our borrowers will pay back the their loans within the agreed terms. Charity Bank is in the same position as any other lending institution in this respect. But in six years’ pilot experience of Investors in Society and the subsequent life of Charity Bank we have had a very low loss rate. All the projects are assessed rigorously by experts at Charity Bank and we simply won’t lend money to organisations that we don’t think are sustainable or that might put the organisation or its beneficiaries at risk. Charity Bank is regulated by the FSA and is required to keep its lending within prudential limits.

All Charity Bank deposits are also covered by the Financial Services Compensation Scheme, providing you with a greater level of security.

How do I claim my tax relief?
When you set up a Charity Bank CITRA account, Charity Bank will send you a tax relief certificate relating to the investment within 30 days. Only one tax relief certificate is issued in respect of each investment. Statements will be sent to you once a year showing the balance and any movements on the account.

Individual investors can claim the relief on their self-assessment tax return for the tax year for which relief is due. A separate claim must be made for each of the years for which relief is sought. If you do not have a self-assessment form, contact your tax office to tell them that you have made a qualifying investment under the terms of the Community Investment Tax Relief.


More FAQs at
http://www.charitybank.org/pages/03-just-savings-pages/04citr-qas.html#Anchor-What-3800

Marigold123

I've emailed them asking about their lending criteria, and to find out whether a housing co-operative could qualify for one of their special accounts.

I'll let you know what I get back.