Fidelity FundsNetwork is to launch an ISA cash facility which will help investors unsure about committing their money to equity or bond markets.
Investors will be able to make full use of their £7,000 ISA allowance by temporarily placing it in the ISA Cash Park before the 5 April deadline, as long as they intend to invest the money into equity or bond funds in the future.
The ISA Cash Park will pay interest monthly at a gross annual rate of 4.85% (AER 4.96%) and is available in mid-March. The gross rate is pegged at 0.4% below the Bank of England base rate.
There is an HM Revenue & Customs charge on interest at source at a flat rate of 20%, so the interest is paid net and tax-payers face no additional tax charge.
Money will be held by The Royal Bank of Scotland on behalf of FundsNetwork.
The minimum contribution is £1,000 and no monthly saving schemes are permitted.
David Dalton-Brown, head of Fidelity FundsNetwork, says: “ISA investors who are nervous about the stock market after January’s turbulence no longer have to defer their investment decision within their ISA and lose this year’s tax breaks. Instead, they will be able to temporarily place their money in cash before the 5 April deadline and then invest into funds at a later date.
“When investors decide the time is right to invest, they can then switch their money from the ISA Cash Park, including interest earned, to any of the 1,100 plus funds from the 60 investment groups on the FundsNetwork platform.”
This excludes cash funds, which are not eligible for the Stocks and Shares Component of an ISA.
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