ISA’s at HSBC | ISA guides

ISA’s at HSBC February 3

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HSBC currently offers four types of ISA: the cash mini ISA, which exempts savings of up to £3,000 pounds from income tax; the capital protected ISA/Pep, a fixed-term programme with returns linked to the FTSE 100 Index; the stocks and shares ISA for funds, which protects funds from income and capital gains tax; and the stocks and shares ISA, which makes shareholdings more tax efficient.

Cash mini ISA

The cash mini ISA is simply a savings account that is exempt from income tax. It comes with no hidden charges and a tax free variable interest rate of up to 5.05 per cent AER/4.94 per cent gross. However, if you already hold an HSBC premier bank account or bank account plus, the tax free variable interest rate will be altered to 5.50 per cent AER/5.37 per cent gross. Each individual is allowed to invest up to £3,000 pounds in a cash mini ISA each financial year, and withdrawals can be made instantly and without notice using either internet or telephone banking. ISA’s can be topped up by the same method, although only if an accumulative total of £3,000 pounds has not already been invested in the account. Interest is received monthly, and the account is open to any UK resident or UK resident for tax purposes over the age of 16.

Capital protected ISA/Pep

Any investment in the Capital Protected ISA/Pep is for a fixed term of six years. Capital investment is protected if it is held to the end of the fixed investment term, with the added incentive of offering a return at the end of the fixed period linked to the growth in the FTSE 100 Index. That return is equivalent to the greater of 75 per cent of any growth in the FTSE 100 Index or a minimum of 18 per cent. The capital protected ISA is available either as a “mini stocks and shares” ISA or a “maxi” ISA. A mini stocks and shares ISA carries a minimum investment of £3,000, and a maximum of £4,000. A maxi ISA, meanwhile, also has a minimum investment barrier of £3,000 but the maximum investment is £7,000. The capital protected ISA is available from 15th January 2007 to 2nd March 2007. Returns are not guaranteed - nor indeed is initial investment - and are subject to market performance.

Stocks and shares ISA for funds

The stocks and shares ISA for funds facilitates the investment of either up to £4,000 of funds investment in a mini stocks and shares ISA or up to £7,000 in a maxi stocks and shares ISA. Investments can be made in any one of a number of funds (both open ended investment companies and unit trusts) from high-profile fund management companies. Funds are tailored for either returns on income, growth, or a combination of both, depending on individual requirements. Once again, it is not necessary to pay income tax or capital gains tax on this investment, although the initial investment is not guaranteed and is subject to market performance.

Stocks and shares ISA for shares

The stocks and shares ISA for shares is designed to make shareholdings tax efficient. From £500 to £7,000 can be invested each tax year in a wide selection of investments including UK equities and gilts. However, in order to be able to do this you have to be registered for HSBC InvestDirect.

Written Exclusively by AdFero for ISA Guides

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