Abbey launches new super ISA

Today, Abbey launches its new Super ISA. The Super ISA is a cash mini-ISA and offers eight per cent AER tax-free until 1 May 2008 if customers put an equal amount or more into Abbey’s tax efficient Guaranteed Growth Plan.

Based on market research that customers do not feel they are saving enough for their futures (72 per cent of consumers don’t believe they’re saving enough), Abbey has developed a market-leading product to help customers build their savings in a tax-efficient way. The product has been designed both to allow instant access to money placed in the Super ISA offering eight per cent interest, whilst deposits in the Guaranteed Growth Plan are invested for the longer term (three or 5.5 years) offering guarantees both on the money deposited and a minimum return, if the money is left for the full term. The product allows transfers in of existing ISA balances customers may already hold.

Should a customer not wish to put away their money for the longer term, they can save into Abbey’s Direct ISA which offers a rate of up to 5.75 per cent.

Super ISA – Highlights

Eight per cent AER until 1 May 2008, when the Super ISA reverts to Abbey’s Direct ISA
Direct ISA offers a highly competitive rate (Currently 5.5 per cent to 5.75 per cent, including a 0.5 per cent bonus until 1 May 2008)
Available to new and existing customers. Free transfer service of cash mini ISAs from other providers
Account offers instant access by telephone, post, internet and cash machine
Interest is calculated daily, and there is no penalty for withdrawal
Minimum investment of £500
Effective rate of 10 per cent for basic rate tax payers or 13.33 per cent for higher rate tax payers

Guaranteed Growth Plan (GGP)

Capital guaranteed with a guaranteed minimum return of nine per cent over a three-year period or 23 per cent over a 5.5-year term

Potentially greater returns, depending on the performance of the FTSE 100 index
Subject to Capital Gains Tax regime, so is therefore more tax efficient than bonds that attract income tax (annual CGT allowance is currently £8,800)

Minimum £500 investment to qualify for Super ISA

Reza Attar-Zadeh, Head of Savings and Investments at Abbey, said: “This product has been designed to help customers save for their future in a tax efficient manner at great rates.

“This compelling product combination pays eight per cent on instant access tax-free savings and offers customers the potential for higher returns through investing in the stock market, whilst guaranteeing their capital and a minimum return.

“The cash ISA element is free from income tax, while the GGP element is taxed under Capital Gains Tax (CGT) rules. Less than one per cent of the population utilise their CGT allowance, currently at £8,800.

“Customers wary of the stock market should consider this product as a way to take their first step into equity investing. The product could also be considered for the low risk segment of more sophisticated investor portfolios.”