How to shelter your investments from the 50% tax rate.

Ellen Kelleher at the Financial Times looks at some of the strategies that can be adopted for avoiding 50% tax on your investments.

How are your savings doing?

So you've worked hard for your money and you expect your savings to do the same. But are they? Many savings accounts are now paying less than 0.1 per cent or less, including those which claim to be "premier" or "reward". Even those accounts which require a notice period are not immune to these low rates - for example the Cater Allen Soverign 30 day account pays 0% interest. How do you make sure that your savings are earning the best rate of interest possible? The answer is simple - review what you have and if needed find a better alternative. Abbey 5% Home Saver account is a regular savings account paying 5% aimed at prospective first time homebuyers (although the accumulated cash can be used for any purpose). It does require ongoing monthly deposits of between £100-£300 per month. If even one month is missed the interest rate drops to 0.1% for that month, after which it reverts to 5%. This shows that there are good deals to be had, if only you shop around.

Jacqueline Thornton CertPFS

Source: Financial Times 17/18 May 2009