Business News

Cut through investment ISA jargon

Filed under: Business Finance — admin @ 9:42 am

This is an advertising feature for Barclays

Even an experienced saver can find the technical language around ISAs and tax-efficient savings daunting. Talk of investment ISAs, plus fixed-term and fixed-rate ISAs is enough to give anyone a headache.

The good news is that once you become familiar with a few key phrases and financial rules, ISAs are quite straightforward. And they remain one of the most tax-efficient ways to save and invest money.

Investment ISAs

Investment ISAs are different to Cash ISAs.

By using an investment ISA (also known as a stocks and shares ISA) you’re putting your money in longer-term investments such as individual shares or bonds – or pooled investments such as open-ended investment funds, life assurance investments or investment trusts. Investment ISAs have the potential to outperform cash savings but there are no guarantees and the value of your investment can go down as well as up.

How much can I invest?

The current ISA limit is £10,200 per tax year, of which up to £5,100 can be saved in cash with one provider. The rest can be invested in an investment ISA  with either the same or a different provider, or you can choose to invest the whole £10,200 in a investment ISA  without any investment in a cash ISA.

ISA limits will be increased annually in line with the Retail Prices Index. This means that the annual ISA limit will increase to £10,680 (£5,340 in cash) for the next tax year, which starts on 6 April 2011 and ends on 5 April 2012.

If you choose to invest the whole allowance in an investment ISA, this can only be with one provider in any one tax year.

Tax and ISAs

Tax rules for investment ISAs are slightly different to cash ISAs.

Investment ISAs are classed as being “tax-efficient” rather than tax-free, because although you don’t pay capital gains tax and income tax, but the tax credit on dividend income received is not reclaimable.

Eligibility for tax relief within an ISA, and the benefit of this to you, depends on your circumstances, and the rules around ISAs could change in the future.

“Open ended” and fixed-term investments

Open-ended funds do not have a fixed maturity date when you can cash them in, but they are generally designed to be held for the medium to long-term (usually five to ten years. Their value at any particular time will always depend on how well the underlying investments perform, so if this has been poor the value could be less than the original amount invested, irrespective of how long it has been held.

Fixed-term investments are usually designed to be held for five or six years. If you access this money early you could get back less than originally invested.

It’s important to think about your attitude to risk before investing in an investment ISA because the returns are not guaranteed, and you may end up with less money than you originally put in because the value of investments can go down as well as up.

For further information on our best ISA deals, visit www.barclays.co.uk.

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

Barclays is a major global financial services provider engaged in retail banking (bank accounts and instant access savings accounts), credit cards, corporate banking, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 140,000 people. Barclays moves, invests and protects money and provides commercial loans, online loans, home insurance, life insurance, a mortgage calculator, guides on how to buy shares and other services for over 49 million customers and clients worldwide. For further information about Barclays, please visit our website www.barclays.co.uk.

Take One Small Step with Barclay’s

Filed under: General — Alan @ 5:33 pm

Take One Small Step is Barclay’s annual competition where wannabee entrepreneurs and small businesses have the chance to win £50,000 each by presenting and bringing to fruition Britain’s best business ideas. A shortlist of 27 business ideas representing nine different regions, with three from each region will be made and the details will be available on takeonesmallstep.co.uk

There will be nine winners of £50,000 to be used in their business along with mentoring and business advice from Barclays and the public will be able to vote for who the want. Louise Hall and Claire Heafford, of The Papered Parlour, won £50,000 for their South London craft and design studio, last year.

In order to offer craft workshops from dressmaking to photography and provide space for artists the two opened the business in May 2009 and they said that by winning the contest they were able to take their business to the next level and promote our profile. The competition is a celebration of people with passion and ambition with a great business idea.

Banks may finally get cash flowing to small business

Filed under: Business Finance — Alan @ 3:57 am

CEOs from Britain’s largest banks are in the process of setting up a venture capital fund to aid small businesses.  The fund would provide a much needed cash flow injection into chosen small business applicants.  It might also make them more likely to get credit from lending institutions.

The banks involved in creating the fund are Barclays, RBS, Standard Chartered, HSBC, and Lloyds.  The fund will provide expansion and development equity for small businesses and each bank would, effectively, have a stake in the businesses.

The banks will all deposit millions into the fund to get it started, with the suggestion that the amount could go as high as 250 million pounds per bank, the venture capital fund could reach as high as one billion pounds.

This all came about as through a taskforce organized by British Bankers’ Association in combination with Department of Business and Treasury.  The venture capital fund is awaiting approval from the Financial Services Authority and the bank boards.

Only a couple of dozen companies whose turnover is under 250 million pounds will probably qualify for funding.  Companies whose turnover is under 20 million pounds are not likely to qualify.  Business secretary Cable and Chancellor Osborne will receive finalized plans shortly.

The same taskforce who put together the venture capital fund is also expected to recommend assistance measures for small business, such as a new process for reviewing loan applications, a mentoring programme designed for small business, and a promise to provide small companies with more greatly detailed information on loans.

Banks not lending enough to small business

Filed under: Small business — Alan @ 4:50 am

Britain’s banks lent out a relatively small £900 to small businesses over the last year according to industry official statistics, which is less than the annual rate average of the last five years.

Politicians and small businesses have criticized banks for not supporting the grass roots industry and lobby groups are taking hold of the statistics from the BBA (British Bankers’ Association) as proof that there is more to be done.

A spokesman for the FSB (Federation of Small Businesses) stated that the credit demand is just as strong as in previous years, but small business is starting to lose faith in lending from banks because of the rising cost of finance.

The BBA statistics show that lending to SMEs increased from £54.4 billion in 2010 from £55.3 in 2009.  Over the prior five years lending grew on average by about £4 billion.  Director for the BBA, David Dooks, stated that the numbers show a reduction in the credit demand.

The BBA also added within the report that it recognizes trends in customers that are willing to pay off their loans and instead increase their savings.

Last year the report showed that customers paid off £11.6 billion of non-mortgage debt and credit card debt over 2010.  Net mortgage lending was only £7.8 billion which is less than a tenth of its increase in 2006 when it reached £110 billion.

The banking industry paid a total of £12 billion in corporation tax throughout 2008 and currently employs 420,000 staff.