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Making the most of your Money
Fortunately, many of us in London and the South-East are now less certain that we will have to pay death taxes. Politicians have finally woken up to the resentment caused by Inheritance Tax. As with other Capital Taxes, we tend to feel this tax is for the wealthy elite, not for us.
But perhaps we accept other taxes too easily and do not make the most of our allowances. Many state benefits go unclaimed. And interest on our savings suffers deduction at source - when it could be tax free in a Cash ISA. It is much the same with longterm savings plans, but these are often poorly understood. MPFS offers lump sum investments and regular savings plans in its with profits funds.
We have been offering the benefit of tax breaks for 20 years, and we pay higher bonuses as a result.
We are, however, left with the distinct impression that many of our members are missing out. It really is not difficult to take advantage of what is on offer.
You just need to state your national insurance number when you apply for an ISA, and make sure you do not give your tax break to more than one provider.
Certainly, it makes filling in your tax return easier - “nothing to declare”.
From next April, you will be able to save a total of £7,200 each tax year in ISAs, of which up to £3,600 could be in a Cash ISA. An ISA in our with-profits fund uses your “stocks and shares” allowance, which means you can have a Cash ISA as well but
not, say, a unit trust ISA.
You can mix lump sums and regular savings in an ISA with the same provider (if they let you).
A lump sum of £1000 invested with us in an ISA 5 years ago is now worth £1290 - the equivalent return on a taxed With-Profit Bond is £1260, and this only discharges liability to basic rate tax.
Friendly Societies are unique amongst long-term insurers in offering “Tax Exempt Savings Plans”. These offer similar tax savings - and again result in higher bonuses. The limit is £25 per month, but in a longterm plan that can build up to a tidy sum. This year, we pay out £4010 on 10 years plans - without the tax break, it would be only £3840. Again, you can only have one provider and have to declare that you are not already using your allowance.
Not all other Friendly Societies promote the tax break and give higher bonuses - so check, if you have savings plans with another Society, that they are not claiming the benefit of your allowance.
Finally, please note that the Tax Exempt Savings Plans can be taken out regardless on any ISAs you have, or where you have them. Children are also eligible - for
example, you could save £25 per month for each of your grandchildren.
• For Further information please call
Metphone 28192, telephone 01689
891454 or visit
http://www.mpfs.org.uk
