Important investment notes

Product Specific:

• AIM and penny shares: AIM and penny shares carry a higher degree of risk of losing money than other UK shares. It may be difficult to deal in these shares. There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them. The price may change quickly and it may go down as well as up. It may be difficult to obtain reliable information about their value or the extent of the risks to which they are exposed.
• Annuity rates: Although some annuity providers provide cancellation rights, these are only available for a limited time and once the annuity is set up you cannot normally cancel it or switch to another provider. Annuity rates may change from time to time and are only guaranteed for a limited time period. An annuity is a long term investment as it cannot be cancelled or transferred to another provider once set up. It does not have a cash-in value. Annuities are covered by the Financial Services Compensation Scheme. This can act as a safety net should an annuity company become unable to meet its annuity obligations.
• Venture Capital Trusts (VCTs): VCTs are higher risk investments and although some VCTs may be viewed as less risky than others, investors should remember that VCTs as a whole are higher risk investments.
• Term Assurance: If you are applying for replacement cover, please do not cancel any existing policy until a new proposal has been accepted and is in force.
• ETFs/ETIs/ETCs: These are exposed to additional risks and not necessarily as simple as first thought e.g. counterparty risk. It is important you understand the risks the specific investment you choose is exposed to. Find out more about ETFs/ETIs/ETCs including the risks
• Pensions/Vantage SIPP: If your employer offers a pension you should consider using this first. The pension and tax rules are subject to change by the government. Tax reliefs and state benefits referred to are those currently applying. Their value depends on your individual circumstances.

  Before transferring a pension you should find out if exit or initial charges will be levied, and then carefully consider whether you believe it will be beneficial for you to proceed, and whether the new benefits will be at least as good (ensure you will not be sacrificing guaranteed annuity rates or investment returns). You will be out of the market for a period of the transfer so you will not be affected by market rises or falls during this time.

  We do not offer a loyalty bonus/ annual saving on funds held within the SIPP or Junior ISA.

  If you are on a low income and may rely on state benefits in retirement a pension scheme may not be appropriate.

  Pension Contribution Checklist: There are some allowances designed to effectively limit the benefit of tax relief on pension contributions. Please ensure you understand if you will be affected by these before making a contribution:

  Lifetime allowance: This is the total amount you can accumulate in pensions. It is measured when benefits are taken from the pension and at age 75. All private and work pensions must be taken into account including any pensions from which you are already taking an income. The current allowance is £1.8 million. There will be a tax charge on any excess above this level. The government intends to reduce the lifetime allowance to £1.5 million on 6 April 2012. This could, for instance, affect those with a pension income of £60,000 a year.

  Enhanced protection: If you have applied for enhanced protection against the lifetime allowance, further pension contributions will invalidate the protection.

  Annual allowance: This limits the amount you can contribute to pensions this year to £50,000. Any payments above this level may have a tax charge and cannot be refunded. For the purposes of the Annual Allowance employer contributions and benefits being built up in final salary schemes will be regarded as if they were personal contributions.

  If you contribute to any pension other than the Vantage SIPP the annual allowance could also affect you if combined contributions spread over two consecutive tax years exceed £50,000. This is because other pension schemes may count your contributions towards the following tax year's annual allowance. To make things simple for our clients, contributions made to the Vantage SIPP always register in the tax year they are made, for the purposes of the annual allowance. It may also be possible to carry forward unused annual allowance from previous years. Please read our Annual Allowance Fact Sheet if you think you may be affected by the annual allowance.

  Recycling: If you significantly increase pension contributions in the year of taking tax free cash from a pension or in the two years before or after, this may be deemed as recycling of tax free cash and subject to a punitive tax charge.

  You should seek advice if you think you may be affected by these limits or don't fully understand how they work. If you have any questions please call our pensions helpdesk on 0117 980 9926. If you require advice they can put you in touch with an adviser. This information is based on our understanding of the current legislation and proposed changes, and is correct as of April 2011, but the government can and does change the tax rules.

WIIN 10/11

Hargreaves Lansdown

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www.hl.co.uk