Friendly society tax free savings

weezie_2

Today's Guardian states that you can save £25 per month tax free in a Friendly Society account. This is in addition to any ISA arrangements. Anyone have more info on this? Who are the Friendly Societies (I'm guessing not just the BSs)?

Baldur

weezie wrote: »

Today's Guardian states that you can save £25 per month tax free in a Friendly Society account. This is in addition to any ISA arrangements. Anyone have more info on this? Who are the Friendly Societies (I'm guessing not just the BSs)?

You will find recent responses by dunstonh to similar queries if you search the board - they are mainly Scottish institutions and their products are not too well thought of, is my take on his replies, with high management charges leading to poor returns.

Milarky

When they demutualise do they have to call themselves 'un-friendly societies' - or maybe 'friendly plcs'

dunstonh

If you looked at the reduction in yield they typically have then you would call them unfriendly already

As Baldur states, I am no fan of them as they are effectively 10 year endowments tax free. However, that tax free status only applies to capital gains tax and income tax for higher rate taxpayers but then 10 year endowments were free of that anyway. Plus, they have no difference on taxation to a unit trust for a basic rate taxpayer or lower.

The biggest issue with them is the charge. The tiny benefit you may gain on tax is lost on the charges. A low/no yield investment such as low/no yield unit trusts or investment trusts can be better for higher rate taxpayers (keeping the higher yielding funds in the ISA).

baby_boomer

Many of them are likely to be taken over by building societies after recent legislation.

They generally offer poor investment performance allied to high charges which is a lethal cocktail.

"Tax Free"?

Why not invest in an ISA tax free with lower charges, flexibility and a wide choice of fund managers :idea: ?