HSBC’s Capital Protected Plan puts other ‘tax-beaters’ in the shade

HSBC has launched a new Capital Protected Plan to help investors maximise their ISA allowances and make the most of the newly increased Capital Gains Tax (CGT) allowances of £9,200 for single investors and £18,400 for qualifying couples.

It combines 103 per cent participation in the growth of the FTSE 100 Index with 100 per cent capital protection. The investment term is five years and investors can rest assured that even if there has been no growth in the FTSE 100, they will still receive their deposit in full at the end of this period.

Malcolm Prince, head of multi-tie investments at HSBC comments: “The HSBC Capital Protected Plan allows us to offer a core capital protected product outside of an ISA Stocks and Shares wrapper for the first time. Returns will be liable to CGT as opposed to Income Tax, enabling customers to make use of their CGT allowance before being taxed on any gains.

“With less than one per cent of the adult population utilising their annual allowance this product serves as the perfect incentive for people to make the most of tax-efficient investments. This is particularly important now that the Chancellor proposes to raise the annual CGT limit to £9,200 for single investors from 6 April 2007.”

The aim of the HSBC Capital Protected Plan is to provide capital growth rather than income and CGT is payable on any gains in excess of the investor’s limit. Based on the CGT annual allowance of £9,200 for 2007/08, and assuming plan growth of up to 25 per cent over the next five years, a single investor can potentially place over £50,000 (over £100,000 for joint investors) into the HSBC Capital Protected Plan without creating a CGT liability.

For example, if a single investor was to utilise their ISA allowances for the 2006/7 and 2007/8 tax-years, and then make a further investment into the HSBC Capital Protected Plan, they could invest a total of £50,800 without the gains exceeding their annual CGT allowance.

For joint investors the investment figure doubles to £101,600 on the same assumptions - without the gains exceeding their annual CGT allowance.

Malcolm Prince, head of multi-tie investments at HSBC concludes: “Its simplicity coupled with the tax advantages on offer make this an ideal investment for typically cautious investors looking for a simple tax-efficient product.”