As The End of The Tax Year Approaches Fidelity International Reminds Over 50s To Use Their Enhanced ISA Allowance

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Over 50s could keep an extra £21,948 out of the tax man’s hands by the time they reach 65. Savings to be made on interest, capital gains and dividend payments.

With the end of the tax year looming, Fidelity International reminds over 50s to use their extra 2009/10 ISA allowance in order to increase their returns by as much as 28% compared to an investment outside a tax wrapper* by the time they reach 65.

For example, if a 50 year old basic rate tax payer placed £10,200 into an-ISA wrapped UK equity fund each tax year, assuming an annual total return of 6.5% per annum, before charges, they could amass £312,447 by the time they reached the age of 65. The investment return of £160,000 would all be shielded from the taxman*.

However, if they chose to invest the same sum in the same fund, held outside an ISA, tax deductions would mean the investment growth at age 65 would be just £137,499. This means that the ISA returns 16% more and they keep an additional £21,948 that they would otherwise have to give to the taxman over the years*.

A higher rate tax payer would benefit even more, keeping £34,708 from the taxman, meaning the ISA would return 28% more.

Just how much extra the investor will get back by sheltering savings in an ISA will depend upon the type of investment and their tax rate. However, what doesn’t change is that over 50’s investors have been given a head start to save with the extra allowance, an opportunity that shouldn’t be missed as savings over just a 15 year period can make a huge difference.

Tom Stevenson, Investment Director at Fidelity International, says, “If you are aged over 50, you still have the opportunity to contribute £10,200 before the end of this tax year. The simple fact is that, if you don’t use this allowance and choose to leave your investments or savings outside an ISA, you’re agreeing to give part of your investment return to the Government. As you can see from our figures, that could amount to throwing away a huge amount of money over the years. An ISA puts all the money back into your pocket and your pocket alone.”

More details on the best ISAs can be found on Fidelity’s dedicated ISA and Tax page on the website by clicking on this hyperlink alternatively investors can telephone Fidelity’s InvestorLine on 0800 41 41 61

Notes to editors:
*Source: Fidelity International, calculations based on UK Equity investments based on interest returns only at an annual rate of 6.5% assuming money invested at start of tax year. Any other form of investment return will give differing results. Higher rate taxpayer calculations based on 40%, basic rate taxpayer based on 20%. Cash returns are only assumptions and are not guaranteed.

FIL Limited (“FIL”) and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US. Any opinions expressed are made at the time of writing and can be subject to change without notification. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity.

For further information, please contact:

Sam Slator    
Fidelity International    
01737 837 847    
07841 783882    

Ali Boyle
Fidelity International
01737 837 881
07904 996086

Press office address: FIL Investments International, Kingswood Place, Millfield Lane, Lower Kingswood, Tadworth Surrey KT20 6RP



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