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Principality’s ISA Builder ensures savers maximise their tax-free allowance

Posted 1st April 2010.

Principality Building Society is launching the ‘ISA Builder Plan’ an innovative new product on 6th April. The Plan links a fixed-rate bond with a fixed-rate ISA to create a convenient way for savers to make sure that they get the full benefit of their Cash ISA allowance.

Customers can choose to open Principalitys new ISA Builder Plan either as a three-Year or five-Year version. When opened, the 5 Year Plan invests a customer’s full 2010/2011 Cash ISA allowance of £5,100 into an ISA, which pays 4.6% AER (tax-free) and a further £20,400 into the Builder Bond, which pays 4.6% gross/AER. For each of the next four years the Plan will automatically transfer the full annual Cash ISA allowance from the Bond to the ISA. This allows savers to automatically make the most of their tax-free allowance whilst also earning a great rate on the remainder of their investment in the Bond. By the fifth year, when the Plan ends, the customers entire investment of £25,500 will be invested tax-free and enjoying a fixed rate.

The three-year ISA Builder Plan works in the same way, investing the full ISA allowance each year and paying a fixed-rate of 3.8% AER (tax free) on the ISA Builder and 3.8% gross/AER on the Builder Bond.

Following the Chancellors new rules in this year’s Budget, which link annual ISA investment limits to inflation, savers will also be able to top-up their Builder Bond, to ensure that they can take advantage of the full annual cash ISA allowance.

Principality says that choosing the ISA Builder will give savers a better return on their money than either a standard fixed-term bond on its own or a combination of a fixed-term bond and a fixed-term ISA. Principality believes the ISA Builder’s tax-free returns will make the Plan especially attractive to higher rate taxpayers.

James Wright, Marketing Director at Principality Building Society, said: ISAs are a great way of protecting your interest from the tax-man, but we appreciate that ensuring you are making the most of your cash can sometimes be a chore. The ISA Builder removes the hassle for you, not only maximising your tax-free investment, but also ensuring that you earn a competitive, guaranteed rate on the money saved in the Builder Bond and you wont have to remember to pay in your ISA allowance by the deadline every year!

Wright explains: The Plan’s fixed rates offer savers certainty in a climate where there is much uncertainty over where interest rates will be over the next five years. In the current climate higher rate taxpayers need to work even harder to get their money to work for them and, according to our calculations, the new ISA Builder Plan really will put their money through its paces.

Principality says the earlier you are able to open the Plan, the better the return. Customers who open the three-Year Plan prior to the 30 April 2010 could earn £1,630.90 or more in interest, depending on when they invest, whilst the return for those with a five-Year Plan is at least £5,684.66.

Interest on the Plan is paid annually and can be paid back into the Plan (although interest from the Builder Bond cannot be added to the ISA), transferred to another Principality account or paid to an account with any other UK bank or building society.

The Plan does not allow withdrawals or additional deposits (other than top ups for new ISA limits) nor are transfers-in of existing ISAs permitted. However, partial or complete closure is allowed, subject 270 days’ loss of interest for the 3 Year or 360 days’ loss of interest for the 5 Year Plan.

For more information or to open an ISA Builder Plan visit any Principality branch or call 0845 045 0006.

Ends

ISA Builder

5 year plan
ISA Builder: 4.60% tax free p.a./AER fixed for 5 years
Builder Bond: 4.60% Gross p.a./AER fixed for 4 years

3 year plan
ISA Builder: 3.80% tax free p.a./AER fixed for 3 years
Builder Bond: 3.80% Gross p.a./AER fixed for 2 years

Interest is paid annually on 6th April.

Interest can be added to the individual account, transferred to another Principality account or paid by direct credit transfer to another UK bank or building society account. However, interest from the Bond cannot be added to the ISA.

5 year plan: fixed until 5th April 2015

3 year plan: fixed until 5th April 2013

Maximum and minimum opening deposits
5 year plan: £5,100 for the ISA & £20,400 for the Bond
3 year plan: £5,100 for the ISA & £10,200 for the Bond

Transfers-in – Not permitted

Additional deposits – Only to cover increased Cash ISA allowance

Withdrawals – Withdrawals are not permitted

Closure – Closure is permitted subject to 360 days’ loss of interest for the 5 Year account and 270 days’ for the 3 Year account.

If the ISA is closed the Builder Bond must also be closed but if the Builder Bond is closed the ISA may remain open.

Account Holders
UK tax residents only
Minimum age is 16
One account per customer only
Special conditions

5 year account

On the 6th of April 2011, 2012, 2013 and 2014, £5,100 will be transferred from the Bond into the ISA
3 year account
On the 6th of April 2011 and 2012, £5,100 will be transferred from the Bond into the ISA

Notes to editors:

Formed in 1860, Principality is Wales’s largest building society.
The Society is committed to supporting the communities of Wales.
With more branches (51) in Wales than any other building society, Principality is the 8th largest building society in the UK.
The Society has assets of over £6 billion.
Principality is committed to remaining a mutual organisation.

For more information please contact:
Paul Beadle, Brazil, Principalitys PR agency
Tel: 01865 556000; email: paul@agencybrazil.com
Emma Stanford, External Affairs Co-ordinator
Tel: 02920 773788; email: emma.stanford@principality.co.uk
Jaime Falarczyk, Corporate Communications Manager
Tel: 02920 773208; email: Jaime.falarczyk@principality.co.uk