You dont have to buy investments inside a tax wrapper. You can hold then unwrapped. Just plain unit trust/OEICs for example. Not inside an ISA, pension or investment bond. It means they will be subject to your personal tax position.
A friendly society plan avoids paying corporation tax on the gains within the fund. However, unwrapped means that these are against your personal allowance and you have a £10k personal CGT allowance each year. So, you can have a gain upto that amount without paying tax. As a £25pm plan isnt going to get those sorts of gains, maybe now you will see why the tax free status of friendly society plans is a red herring. You just end up having a reduction in yield due to charges of about 3-4 times more than other investments.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
Dunstonh has explained the disadvantages of the TESP. The Investment Bond is similar for a basic rate taxpayer - tax has already been paid that you probably wouldn't have paid in an unwrapped unit trust/oeic. Charges tended to be higher too.
After joining most Building Societies (City of Derry still eludes me) I turned my attention in 2000 to Friendly Societies and some Assurance companies which are of course mutual. I can fully understand that these societies are not for everyone and whether they will produce any windfall is speculative. As a member of most of the remaining friendly societies of any substance I can comment on the 2 societies that planteria has connections with. Each and every member of both societies can introduce a new member where it is upto the 'new' member to decide whether any of the available products are suitable for them. It is not upto any existing member to do any selling whatsoever. If the introduced person decides to proceed with a product both parties will receive £25 worth of vouchers after a set period. From the above you can see that every member is a possible introducer. From my perspective the investment in the small TESP is a vehicle to obtain membership, pure and simple. The amount involved is not substantial and in my view it is upto each individual to decide on their own portfolio and not be subjected to criticism for their choice.
From the above you can see that every member is a possible introducer.
I am sure they are. However not every member comes on to MSE and touts for business.
The amount involved is not substantial and in my view it is upto each individual to decide on their own portfolio and not be subjected to criticism for their choice.
Planteria was not criticised for his choice. He was criticised for coming on here and posting referral links.
If anyone chooses to use a TESP for their investment, then they also need to be aware that it's a rubbish choice with regard to high charges and low quality. If they still want to go ahead knowing that, then that is up to them.
So, as a new member of MSE, what brought you to this thread? I'm sure it wouldn't have been planteria but just your love of Friendly Societies.
Replies
i don't understand that, sorry.
A friendly society plan avoids paying corporation tax on the gains within the fund. However, unwrapped means that these are against your personal allowance and you have a £10k personal CGT allowance each year. So, you can have a gain upto that amount without paying tax. As a £25pm plan isnt going to get those sorts of gains, maybe now you will see why the tax free status of friendly society plans is a red herring. You just end up having a reduction in yield due to charges of about 3-4 times more than other investments.
Dunstonh has explained the disadvantages of the TESP. The Investment Bond is similar for a basic rate taxpayer - tax has already been paid that you probably wouldn't have paid in an unwrapped unit trust/oeic. Charges tended to be higher too.
I am sure they are. However not every member comes on to MSE and touts for business.
Planteria was not criticised for his choice. He was criticised for coming on here and posting referral links.
If anyone chooses to use a TESP for their investment, then they also need to be aware that it's a rubbish choice with regard to high charges and low quality. If they still want to go ahead knowing that, then that is up to them.
So, as a new member of MSE, what brought you to this thread? I'm sure it wouldn't have been planteria but just your love of Friendly Societies.
Oh jem - have you never heard of a coincidence?
WR
But surely coincidences only happen on wine investment and student pod investment threads :rotfl:
You forgot the guaranteed 15%pa on the pension unlocking threads. :rotfl:
My love of all mutuals including Friendly Societies of course !!
Really liked this one WR