Contractor Financials ? An Overview

You can help maximise the potential of your investments with wide range flexible solutions for Contractors. The extensive experience of the IFAs at ContractorFinancials means that they can search thousands of investment funds to find the right solutions for you.

One of the most popular investment routes amongst Contractors is an Individual Savings Account (ISA) because of its significant tax breaks and flexibility. There are a number of key benefits for an ISA investment:

• You can invest up to £7,200 each year into an ISA account.
• There are a wide range of ISAs to choose from so you can find the best solution to your needs
• ISAs offer a flexible investment option that is suitable for medium and long term investments and with most you can draw out your savings at any time.

Make the most of your savings

With HMRC's continuing efforts to remove the tax breaks available to Contractors, now more than ever it is important for you to take advantage of the few remaining options available.

In the 2009 Budget, it was announced that from the 6th October 2009, the overall maximum ISA allowance for the over 50s has increased to £10,200 for the 2009/10 tax year. In essence this means that if you are 50 or over not later than 5th April 2010, you can use your £7,200 allowance now and top up with the extra £3,000 after the 6th October 2009. This allowance increase will be available to everyone from the 6th April 2010.

You can invest a maximum of 50% of your allowable portion in a cash based ISA, 100% in an equity (stock market) based ISA or a mixture of both.


Equity ISA
Investing in an equity ISA is one of the most popular options and stock market based investments historically offer the best returns as long as you can accept that your funds may fluctuate in value. It is often best to opt for a term of five years or more so that your savings have a chance to grow and hopefully ride out any dips in the stock market. ContractorFinancials search thousands of options to short list the funds that have a history of positive performance and strong prospects.

You have the option to invest in a lump sum however the advisers will recommend that you use monthly contributions to spread the risk of market fluctuations and avoid the end of tax year rush.


Cash ISA
For investors with a low risk tolerance or those that need to have access to their savings in the short term, a cash ISA would probably be more suitable as savings can be accessed instantly. With a cash ISA you should benefit from a higher interest rate than you would gain in a High Street savings account because banks view ISA investments as a longer-term commitment and reward this with extra interest.
Offering a compromise between the cash and equity ISAs, a protected ISA tracks the stock market but it carries a protection policy for the underlying value of the fund. This allows Contractors to benefit from the potential for growth in an equity ISA with the security of a cash ISA.
Ideally both if affordable, as the pension offers substantial up-front tax breaks whilst the ISA offers accessibility. This ability to access your savings at any time with an ISA carries dangers as you are more likely to take money out leaving no long term nest egg. The pension cannot be accessed until you are 50 (55 from April 2010) which ensures you will have a pot for your retirement.

ContractorFinancials will be happy to advise you on your investment options, to find out more please call 0845 062 8888 or email excellium@contractorfinancials.com