NDFA releases fifth issue of fixed income plan

NDFA has released its fifth Regular Fixed Income Plan October 08, which benefits from the tax efficiencies for dividend income from non-UK shares. The five and a half-year plan is linked to the FTSE 100 and provides either an annual income of 7.5% per year in five payments, with a final 3.75% or a monthly income of 0.61%.

The annual and monthly income levels are fixed and are paid irrespective of the index performance. Capital repayment at maturity is linked to the performance of the index, so if the final index level is the same or higher than the starting index level, the plan repays the original amount invested. If the final index level is less than the starting index level, original capital is repaid unless the index falls by 50% or more from its starting level at any point during the investment term.

The plan provides tax-free non-UK dividends to basic rate taxpayers, while rates are reduced to 25% for higher rate tax payers, by investing in preference share securities. This beneficial tax treatment derives from the extension of tax credits already applied to investors in receipt of UK dividends, to those in receipt of non-UK dividends.

The offer closes on November 28 and the plan matures on June 19 2014.