key features of the Ready-made Lifetime ISA August 2017

Transcription

1 key features of the Ready-made Lifetime ISA August 2017

2 2 account key features The Financial Conduct Authority is a financial services regulator. It requires us, The Share Centre, to give you this important information to help you decide whether our Lifetime ISA account is right for you. You should read this document carefully so that you understand what you are buying and then keep it safe for future reference. Please also read our Terms of Business, Tariff, and the Key Investor Information Document for your chosen fund(s). As these will detail the specific aims, risks and charges associated with that investment. The information supplied in this document is as accurate and current as we can make it. If you have any queries or need any additional information, please call us on If you are in any doubt about your investment decisions, please speak to an independent financial adviser, since The Share Centre provides an Execution-only dealing service without any investment advice. FTSE is a registered trademark of the London Stock Exchange plc and the Financial Times Limited, and is used by the FTSE under licence. Its Aims The Share Centre s Ready-made Lifetime ISA aims to: Give you, as an year old, the opportunity to invest a sum of money towards your first house purchase and/or saving for retirement. Enable you to invest in one of, or a combination of, the TC Share Centre ICVC; Cautious, Balanced or Adventurous. Enable you to hold your investment(s) (subject to requirements) in a tax efficient Lifetime ISA. Your Commitment Our Lifetime ISA does not have a minimum initial investment amount, although you need to be aware that the fixed costs of investing can have a negative effect on relatively small investment amounts. There is no minimum length of investment, but please remember that most investments linked to the stock market are designed for the medium to long term and are not suitable for money which you might need at short notice. You agree to pay into your Lifetime ISA before you reach age 40. No more than the permitted annual allowance of 4,000 may be paid into a Lifetime ISA. You need to consider your level of subscription and choice of investment in relation to your savings objective, your expected timescales for saving and your circumstances as a whole, including other provisions for retirement.

3 3 You recognise that your circumstances could change and the need to regularly review your subscription level and choice of investment. You agree not to take out another Lifetime ISA in any tax year you subscribe to The Share Centre Ready-made Lifetime ISA. The Risks Before making any decisions, you need to be aware of the risks involved in any type of investment: The value of your investments and any income they may provide can fall as well as rise, and you may get back less than you originally invested. What you get back will depend on the performance of the investments you choose. Nothing is guaranteed and past performance is not a reliable indicator of future performance. Once you reach age 50, you cannot make any further contributions. If you become a non-uk resident for tax purposes, you cannot make any further contributions. A withdrawal charge of 25% may be applied if funds are withdrawn from a Lifetime ISA before you are 60, unless you are using the proceeds to buy your first home or are terminally ill. You may also incur this charge if you transfer your Lifetime ISA to another type of account. If you do withdraw from your Lifetime ISA you may incur a withdrawal charge which could lead to you receiving back less than you paid in. If you save in a Lifetime ISA rather than a pension scheme you may lose the benefit of your employer s contributions. Saving in a Lifetime ISA may affect your current and future entitlement to means tested benefits. Inflation will reduce the real value of your investment(s) and could reduce your purchasing power in the future. The charges on the fund(s) you choose may be increased by the fund manager(s). We may increase our account charges. Governments could change the way our tax-efficient accounts and other investments are taxed. Investing in funds is considered to be more appropriate for medium to long-term investments i.e. three to five years or more.

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5 5 questions and answers What is an ISA? ISA is short for Individual Savings Account. An ISA enables you to invest without having to pay income tax or Capital Gains Tax on any profits you make. Even if you re a higher rate tax-payer, there s nothing more to pay. ISAs don t have to be reported on tax returns either. What types of ISA are there? If you decide to invest in an ISA, you need to consider what type of ISA is appropriate for your needs. There are four types of ISA: Stocks & Shares ISAs enable you to invest in the stock market through investments including many Unit Trusts, OEICs, investment trusts, shares, corporate bonds, gilts and Money Market funds. Cash ISAs enable you to save money via building society and bank deposits, and Money Market funds. Innovative Finance ISAs enable you to earn income by investing in Peer to Peer loans. Lifetime ISAs are specifically designed to help young people over 18 and under 40 save for their first home and / or their retirement (on or after their 60th birthday). What types of ISA do The Share Centre offer? We offer a Ready-made Lifetime ISA which can invest in any one of, or a combination of, the three funds of funds managed by us: TC Share Centre Multi Manager Cautious Fund, TC Share Centre Multi Manager Balanced Fund and TC Share Centre Multi Manager Adventurous Fund. We also offer two types of Stocks & Shares ISA: Self-select and Ready made. Our Ready-made ISA can only invest in any one of the three funds of funds: TC Share Centre Multi Manager Cautious Fund, TC Share Centre Multi Manager Balanced Fund and TC Share Centre Multi Manager Adventurous Fund. Please note that we don t offer a Cash ISA or an Innovative Finance ISA. Am I eligible for an ISA? To invest in a Stocks & Shares ISA, you must be age 18 or over, and resident in the UK for tax purposes. You can also be a Crown employee serving overseas, or their spouse/civil partner. In any one tax year, you must only contribute to one Stocks & Shares ISA. How much can I invest in an ISA? The government sets a limit on how much you can invest in an ISA each tax year. This year (2017/18) you can invest up to 20,000 in an ISA. Your allowance can be split between a Stocks & Shares ISA, a Cash ISA or an Innovative Finance ISA as you wish, and if you are eligible you can invest up to 4,000 of your allowance into a Lifetime ISA. Bear in mind that your annual ISA allowance expires at the end of the tax year (5 April) so there s no catching up next year if you don t invest the full amount. It s a case of use it or lose it! Please note that it is your responsibility to ensure that you have not exceeded your total ISA allowance each year. What is a Lifetime ISA? A Lifetime ISA has many of the same features as an ISA, it enables you to invest without having to pay income tax or Capital Gains tax on any profits you make. Even if you are a higher rate tax payer there s

6 6 nothing more to pay. Lifetime ISAs don t have to be reported on tax returns either. The Lifetime ISA also has some additional features. You may be eligible to receive a government bonus of 25% on the money you pay in, however some withdrawals may be subject to a withdrawal charge of 25%. Am I eligible for a Lifetime ISA? To open a Lifetime ISA, you must be aged over 18 and under 40, unless you are transferring a lifetime ISA to us from another provider and resident in the UK for tax purposes. You can also be a Crown employee serving overseas, or their spouse/ civil partner. In any one tax year, you must only contribute to one Lifetime ISA. How much can I invest in a Lifetime ISA? The government has also set a limit on how much you can invest in a Lifetime ISA. The annual allowance for a Lifetime ISA is 4,000, which forms part of your overall ISA allowance for the tax year. If you choose to invest 4,000 in a Lifetime ISA you will have 16,000 allowance remaining to split between a Stocks and Shares ISA, a Cash ISA and an Innovative Finance ISA. You must pay into your Lifetime ISA before your 40th birthday and you can then continue to make payments until the day before your 50th birthday. Please note that it is your responsibility to ensure that you have not exceeded your total ISA allowance each year. How does the Lifetime ISA government bonus work? The government will pay in a 25% bonus on any savings you pay into your Lifetime ISA which means you can receive up to an extra 1,000 per year in addition to what you pay in yourself. From 2018/19 this bonus will be paid to your account monthly and the amount of bonus you receive each month will depend on how much money you have paid into your Lifetime ISA during the previous month. For example: if you have paid in 100 in April you will receive a bonus of 25. If you haven t made a payment in that month you won t receive a bonus payment the following month. Please note in 2017/18 the government bonus will be paid into your account as a lump sum at the beginning of the 2018/19 tax year and the amount will be based on the total amount of money you have paid in during the 2017/18 tax year. Can I make withdrawals from my account? You can sell investments and either reinvest the proceeds or withdraw them. A 25% withdrawal charge will apply on unauthorised withdrawals (which are explained in more detail below) from a Lifetime ISA. What is an Authorised withdrawal? In certain circumstances you can withdraw money from your Lifetime ISA, including any government bonus, without incurring a withdrawal charge. Retirement: You can withdraw funds from your Lifetime ISA for any reason at any time following your 60th birthday. First Time Home Purchase: You can use the money in your Lifetime ISA (including the government bonus) to buy your first home up to a value of 450,000. Please remember you can only do this 12 months from the date of the first

7 7 payment into your account. For example if you open a Lifetime ISA and made a payment into the account on 6 April 2017 you will be able to make an authorised withdrawal for a house purchase from 6 April However, if you open a Lifetime ISA on 6 April 2017 but didn t make your first payment into the account until 6 October 2017 you would not be able to make an authorised withdrawal for a house purchase until 6 October (This is the case for each Lifetime ISA you hold.) You will need to provide us with details of your conveyancer and your instruction to pay the funds directly to them. We will then make the payment within 30 days from the day of receipt of the required documentation from them. For more information please contact our Customer Services Team on Terminal Illness: If you are diagnosed with a serious illness and are advised that you have 12 months or less to live you are entitled to make an authorised withdrawal from your Lifetime ISA for any reason. We will require written evidence from a registered medical practitioner. For more information please contact our Customer Services Team on Death: In the event of your death your Estate will still be entitled to receive the government bonus. Your personal representatives will be required to provide some documentary evidence. For more information please contact our Estates Team on What is an Unauthorised withdrawal? If you need access to your funds for any other reason than the ones detailed as authorised this will be considered to be an Unauthorised withdrawal which will be subject to a withdrawal charge of 25%. The charge will be calculated based on the actual amount of money withdrawn from the account. For example if you pay in 4,000 to a Lifetime ISA account you will receive a government bonus of 1,000. If you then decide to withdraw all the money from the account a 25% withdrawal charge of 1,250 would be deducted so the amount you receive would be 3,750. From 2018/19 the penalty charge will be deducted prior to funds being withdrawn from the account and this amount will then be returned directly to HMRC. In 2017/18 no penalty charge will apply, however no partial withdrawals will be permitted during this period. Therefore, any withdrawal from a Lifetime ISA must be of the full balance and the account must then be closed. You will be able to open another Lifetime ISA and begin saving again within the 2017/18 tax year if you wish. What are the fees relating to my account with The Share Centre? With a Ready-made Lifetime ISA there is no dealing commission, administration fees or initial charges. There are ongoing fund charges which are automatically taken from the fund, these charges are dependent on the fund, and are detailed in the Key Investor Information Document. Other fees may apply to any deals you place, such as Stamp Duty and PTM Levy. If you choose to have your statements & contract notes sent by post (rather than ), you will be charged VAT per month. Details of all fees are set out in the applicable account tariff and are available at share.com. Can I change my mind? Applications for an account are subject to a 14 day cancellation period from the day we receive it.

8 8 Cancellation rights apply to the account but not to your request to purchase investments. Once a valid instruction for an investment has been dealt, you may not cancel it. Can I take an income from my investments? The Lifetime ISA is intended as a way of saving for your first home and/or retirement, not to provide an income. Any income that is generated from your investments can be added to your account as cash, or reinvested. You may withdraw money from the account at any time however some withdrawals may be subject to a 25% withdrawal charge. Can income be reinvested? Income distributions can be reinvested in accordance with the terms of the account. How will tax affect my investments? For investments held within our tax-efficient Readymade Lifetime ISA, any income will be free of income tax. Any capital growth will not be subject to UK Capital Gains Tax. How do I invest in a Fund? Firstly, ensure that you have read the Key Investor Information Document specific to your chosen fund(s). You should keep a copy of this document, which is available from our website. You should also keep a copy of this Key Features Document, as it contains specific information relating to the operation of the account. When you have made your investment decision, you can purchase your fund by using money in your account. Money can be paid into your account in a variety of ways including debit card, cheque or Direct Debit. How can I use the different funds? The Lifetime ISA is intended as a way of saving for your first home and/or retirement, how you invest in the funds will be dependent on your saving aims and your attitude to risk which is why there is a choice of three funds. Further information on the funds can be found on share.com. As situations and investment goals can change overtime you should regularly review your Readymade Lifetime ISA account. When will my money be invested? With most fund investments, dealing usually takes place once a day at a time determined by each individual fund manager, and is based on the price at the valuation point of each fund. The Share Centre has an 11:30am cut-off for orders in the TC Share Centre ICVC to be processed on that day. Any orders received after 11:30am will generally be processed the next working day. What documentation will I receive? When you make an investment, we will normally send you a contract note confirming details of your investment. How can I keep track of my investments? We will send you statements showing the value of your investments and all transactions since the previous statement. You may view your investments online at share.com.

9 9 We will also keep you informed about any corporate actions (such as takeovers and mergers) which may affect your investments. How will my investments be registered? For the Ready-made Lifetime ISA your fund investments will be registered in a Nominee Company owned by Cofunds Limited. For further details, please see The Share Centre Terms of Business applicable to your Account. Can I transfer my investments to another account provider? You can transfer your account, subject to our terms of business and acceptance by your new account provider. The manner in which any transfer is completed may vary and your holding might need to be sold so that the proceeds can be transferred to your new provider. In this scenario, dealing commission may be payable. Details of transfer and dealing charges are set out in our applicable account tariff. For Lifetime ISA accounts, you will need to provide a completed transfer authority to the new account provider, who will contact us to arrange the transfer. Please be aware that the value and income from investments can fall as well as rise and you will not be able to deal in your investments during the transfer. Therefore, you may potentially lose income/ growth whilst the transaction is being completed. Are there any restrictions on transferring my Lifetime ISA to another ISA manager? You can transfer any money held in an existing Cash ISA, Innovative Finance ISA or Lifetime ISA, and any investments held in an existing Stocks & Shares ISA or an existing Lifetime ISA to a Lifetime ISA with The Share Centre. Transferring an existing ISA will count towards your Lifetime ISA allowance of 4,000 but does not count against your current year s overall ISA allowance. Therefore if you do transfer 4,000 from an existing ISA into a Lifetime ISA your Lifetime ISA allowance would be fully subscribed, however you would still be able to pay in 20,000 to a Cash ISA, Stocks and Shares ISA or an Innovative Finance ISA. If you wish to transfer any money or investments held within a Lifetime ISA at The Share Centre to another Lifetime ISA account elsewhere you can do so. Please note that if you transfer a Lifetime ISA to any other type of account (including Cash ISAs, Stocks and Shares ISAs or Innovative Finance ISAs) this will be considered to be an unauthorised withdrawal and the amount that you are transferring may be subject to a 25% withdrawal charge (which is the deduction of the government bonus and any growth or interest on this, plus a 5% charge). What happens if my deceased spouse held an ISA with you? If your spouse or civil partner died on or after 3 December 2014, you may be entitled to an Additional Permitted Subscription (APS) equal to the value of your deceased spouse s ISAs, this includes the funds held within your Lifetime ISA together with any accrued government bonus, at their date of death. This APS is in addition to your personal annual ISA allowance but is only available for a limited time period related to your spouse s estate. Even if you did not inherit your spouse s ISA assets, you will be entitled to the APS, provided you were in a committed marriage at the time of their death. If you did inherit your spouse s ISA assets, these may be used as part of the subscription once beneficial ownership has passed to you.

10 10 Please note that you can open a new Stocks and Shares ISA with The Share Centre and use this additional allowance even if your spouse s ISA was held elsewhere, however you will only be able to make cash subscriptions. Please note you cannot use this additional allowance within a Lifetime ISA with The Share Centre. What if I have a complaint? We want you to be entirely happy with the service you receive from us. If you have a complaint, please contact us by any means, including letter, telephone or . If you are not happy with the way your complaint is handled, you may have the right to refer the matter to the Financial Ombudsman Service, Exchange Tower, London, E14 9SR. Making a complaint will not affect your right to take legal action. Who is the account provider? The Share Centre Limited is authorised and regulated by the Financial Conduct Authority under reference number The Share Centre is registered in England, company number ; registered office: Oxford House, Oxford Road, Aylesbury, Bucks HP21 8SZ. What if I need further information? Please contact our Customer Service team on What happens if The Share Centre cannot meet its liabilities concerning my account? The Share Centre participates in the Financial Services Compensation Scheme (FSCS). You may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for 100% of the first 50,000. Further information about the compensation scheme arrangements is available on request from the FSCS at telephone number:

11 11 What might a Lifetime ISA be worth at age 60? The following illustrates the value of a Lifetime ISA, at age 60, depending on the age at which you start saving and assuming that you have subscribed the full amount at the beginning of each tax year up to age 50 and have received the Lifetime ISA government bonus. The table below provides information if you are using the Lifetime ISA to save for retirement and may not be relevant if your saving aim is for a first home purchase. What might a Lifetime ISA be worth at age 60? Age saving in a lifetime ISA started Total amount paid in by lifetime ISA saver/investor Total amount paid in, plus lifetime ISA government bonus Estimated outcome at age 60 from 0% return Estimated outcome at age 60 from 5% return Charges and estimated inflation would reduce a 5% return to % , , , , % 25 96, , , , % 30 76,000 95,000 95, , % 35 56,000 70,000 70, , % 40 36,000 45,000 45,000 94, % Lifetime ISA charges taken into account in the table may vary over time. They do not include any fee or charge that is payable by or on behalf of you to a provider in respect of the Lifetime ISA. And they do not include any charge relating to the qualifying investments held in the Lifetime ISA.

12 12 An example OEIC (Growth) fund Normally, shares in an OEIC fund have a single price, which means there is no bid/offer spread; merely a single price at which you buy and sell. The initial charge is deducted from the amount you invest, and the remaining subscription invested at the single price. Annual charges and expenses are deducted from income. Figures are based on accumulation shares. Please note that when comparing the example below, the maximum that can be invested into a Lifetime ISA is 4,000 per year. Impact of charges on your fund investment The table below illustrates the total effect of charges and expenses on a typical fund investment. The charges used in calculating these figures are illustrative. The actual charges applicable to the fund you choose are detailed in the Key Investor Information Document. Initial Charge 0% Annual Management Charge 1.38% Additional charges and expenses 0.28% Ongoing Charges Figure 1.75% Investments within a Ready-made Lifetime ISA At end of year Investment to date ( ) Effect of deductions to date ( ) What you might get back at 5.00% ( ) Lump sum Monthly Lump sum Monthly Lump sum Monthly 1 4,000 1, ,120 1, ,000 3, ,372 3, ,000 6, ,640 6, ,000 12,000 1,207 1,606 5,381 13,987 The last line on the table shows that over 10 years the effect of the total charges and expenses could amount to 1, (lump sum investment) or 1, (monthly saver). Putting in another way, if the growth rate were to be 5.00% per year, which is in no way guaranteed, the total charges would have the effect of reducing the growth rate to 2.97% per year on the lump sum investment or the monthly saver.

13 13 Please note: The Share Centre s dealing charges and account costs are not included. The effect of charges is based on a lump sum investment of 4,000, with an assumed growth rate of 5% per year. This growth rate is laid down by our regulator, the Financial Conduct Authority, to demonstrate the effect of charges and expenses on an investment and is not guaranteed. The figures do not take into account any additional discount you may receive on your investment. The inflation rate is assumed at the Bank of England long-term target rate of 2.5%.

14 14 PO Box 2000 Aylesbury Buckinghamshire HP21 8ZB phone deal fax web The Share Centre Limited is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority under reference number Registered in England number Registered office Oxford House Oxford Road Aylesbury Bucks HP21 8SZ. LISA KF 0817