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NDFA boasts clever take on tax


Regular Fixed Income Plan April 08

Type: Capital-protected bond

Aim: Income linked to the performance of the FTSE 100 index

Minimum-maximum investment: £10,000-£1m, Isa £3,600-£7,200

Term: Five years and six months

Return: 8% income a year or 0.65% income a month

Guarantee: Original capital returned in full provided the index does not fall by more than 50% without returning to at least its initial value

Closing date: June 2, 2008, May 19, 2008 for Isa transfers

Commission: Initial 3%

Tel: 01727 734315

NDFA’s regular fixed income plan April 08 provides a choice of 8 per cent income a year or 0.65 per cent income a month. It is linked to the performance of the FTSE 100 index over a term of five years and six months.

Discussing the strong points of this product, Baronworth Investment Services director Colin Jackson thinks NDFA has cleverly taken advantage of the recent budget changes. “The product has been constructed so that income received for investments made outside an Isa will be subject to dividend tax. This means, in real terms, that after taking into account tax credits, basic rate taxpayers will not have to pay any tax and higher-rate taxpayers only 25 per cent tax.”

Jackson thinks this product is suitable for clients who are looking for a good level of income but are prepared to take an element of risk with their capital. He feels the adviser remuneration is in line with the market, but complains that there is no trail commission. He adds that the literature as attractively produced and easy to understand.

Provided the investor is aware of the risk as to capital there is nothing that Jackson does not like about the product.

“There have been, and will continue to be, a host of investment products that offer a fixed level of income with return of capital linked to the FTSE 100. However, this is the first product that I have seen where the income will be subject to dividend tax,” he says.

Summing up Jackson says: “The level of income is very attractive taking into account the risk as to capital.” He reiterates his earlier point that what makes the product stand out is that income will be subject to dividend tax.


Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good

Overall 9/10


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