ISA Tax Wrapper

SmileY_4

Afternoon

So I had a little more than £3000/£7000 that I wanted to put away but I was going to put it into Barclays Tax Haven ISA (I am a barclays customer already). In the end I had a chat to the Barclays Financial Advisor and she offered some products (not Barclays - but I assume theres commision in there for them).

In the end I put 80% in the Jupiter Merlin Income fund and 20% in the Fidelity South East Asia fund. Overall this gave me an Adventurous look which I am happy with as the 80% is in fact balanced.

Overall:-
35.2% uk equities
31.2% overseas equities
22.4% cash
11.2% uk bonds

Now heres the thing I didnt know about and this may help those that havent yet chosen their ISAs that have a little more to save....

These funds are ISA Wrappers, therefore, this year (well 5th April) I will immediately have £7000 of those funds TAX FREE, then 6th April another £7,200 will be TAX FREE etc every year .... So in theory, after 5 years, I would have approx £37,000 TAX FREE!!! the rest is taxed at only 10% unless you are a higher tax payer!

This pleases me, so I now I hope that monies will continue to rise.

Was this a good deal and/or have I boobed up?

Thanks, comments welcome!

cheerfulcat

SmileY wrote: »

So in theory, after 5 years, I would have approx £37,000 TAX FREE!!! the rest is taxed at only 10% unless you are a higher tax payer!

Not sure what you mean by " the rest " but the starting rate band has been abolished - it remains for savings but in practice will apply only to a very few people -

HMRC

" There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable. "

Aegis

cheerfulcat wrote: »

Not sure what you mean by " the rest " but the starting rate band has been abolished - it remains for savings but in practice will apply only to a very few people -

HMRC

" There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable. "

I'm assuming he means dividend income?

cheerfulcat

Yes, I did think of that - just thought I'd point out a possible oversight.

SmileY_4

hi guys

thanks for replies.

erm well as im not of a complete understanding I believe what I meant by "the rest" is the residual should I decide to release the money from the fund out (is this CGT then?!).

Eg. £20,000 in the fund

tax free isa as of 6/4/08 £7000+£7200=£14200
10% tax on £5,800 (+any interest on the £20,000 the fund has generated)

I think this is right?