Is the Selestia route any good?

dunstonh

Depends if they want to transact annually in using up the CGT allowance. Plus you have costs in dealing with that as you would get a 0.8% every time you put the money back in again. There is also the higher rate tax on the income.

I dont think there is enough time to worry about offshore but 6 years of onshore then a move to collectives could be an option. Although I doubt the Selestia option would be best there. If the adviser goes low cost with NU or Cler Med as he has suggested he would with Selestia, then the RIY over a 5 year period on those two would be about 0.5% moving to around 1% over 10 years.

Chrismaths

Depends if they want to transact annually in using up the CGT allowance. Plus you have costs in dealing with that as you would get a 0.8% every time you put the money back in again. There is also the higher rate tax on the income.

Depends how you structure it. A selection of ZDPs with different maturities/or some synthetics, or coming back to IFA investment land a fund of ZDPs would structure the return as capital rather than income with the lower risk qualities the OP was looking for.

I figure HR tax on the income would probably be less than the notional CGT charge in the bond (though it would depend on the mix of assets in the investment bond, and the yield on the portfolio). I think any benefits from an investment bond would be marginal at best.

I tend to work on the principle that "if it not necessary to use a life company, it is necessary not to use a life company" - but I suppose I invest in things you don't get in an investment bond (equities, ITs, alternatives) so I find the limitation annoying.

EdInvestor

Selestia is just a "platform" on which an IFA can conveniently list your investments so he can see them all at once.

If you want to invest in shares,bonds,unit trusts, investment trusts, OEICs, gilts etc and use the ISA or Sipp(pension) wrapper (but not the life/insurance bond*), you can do this yourself at no cost and with discounts on the underlying charges via discount brokers such as

https://www.h-l.co.uk or
https://www.selftrade.co.uk

*Investment bonds have very high charges and your investments incur additional taxes that you would not pay if you invest direct. Avoid.

dunstonh

Selestia is just a "platform" on which an IFA can conveniently list your investments so he can see them all at once.

Talk about posting in a negative manner.

Selestia is a funds supermarket just as Fidelity FNW and Cofunds. HL is a fund supermarket as well.

*Investment bonds have very high charges and your investments incur additional taxes that you would not pay if you invest direct. Avoid.

Investment bonds would give you no further liaiblity to higher rate tax (if held until you are a basic rate taxpayer) and no personal liaiblity to CGT. SO, you are getting the product taxed as if you were a basic rate taxpayer. The charges on the 6 year term we are looking at here plus the discounts would make it cheaper than the OEICs/UTs.

So, its cheaper and its more tax efficient. Both the things that Ed says it isnt.

EdInvestor

Chrismaths wrote:

Probably best to consider using up your CGT exemptions before considering investment bond. Direct investment (ie not through an investment bond) is probably the better route.

Indeed so.You only pay tax on *realised* gains over 9k a year each - so if you just sell 7k's worth of gains a year, so as to then fill up the ISA and rebuy, there's no tax to pay there.

On dividend income an HRT pays 25% tax (still a big improvement on cash and bonds @40% ), but if you don't want to pay that, choose funds with a low yield or shares with no dividends for the moment, then shift back when you retire.You pay no dividend tax as a BRT.

By contrast you will pay 20% tax on *all* gains, realised or not, in the bond and astronomical charges to the insurer and the IFA as well - plus (for God's sake) now we have an extra charge to the "fund supermarket", for the conveneience of the IFA.

So that's no less than 4 groups of suits homing in on your money.

IFA
fund management company
insurance company
fund supermarket company

You can kiss goodbye to at least half your returns, almost certainly more.:(

dunstonh

Indeed so.You only pay tax on *realised* gains over 9k a year each - so if you just sell 7k's worth of gains a year, so as to then fill up the ISA and rebuy, there's no tax to pay there.

On dividend income an HRT pays 25% tax (still a big improvement on cash and bonds @40% ), but if you don't want to pay that, choose funds with a low yield or shares with no dividends for the moment, then shift back when you retire.You pay no dividend tax as a BRT.

By contrast you will pay 20% tax on *all* gains, realised or not, in the bond and astronomical charges to the insurer and the IFA as well - plus (for God's sake) now we have an extra charge to the "fund supermarket", for the conveneience of the IFA

Wrong.

You can kiss goodbye to at least half your returns, almost certainly more.:(

produce figures to back that up please.

EdInvestor

The politics behind this fund supermarket platform business are quite interesting.

Especially as they relate to price transparency.

jem16

Ed,

Have you ever considered a career in politics?

You absolutely excel in the art of flannel and statistics