The Cofunds Cash Reserve facility is a solution for investors who wish to retain their cash within an ISA, but who don't want to invest it in funds immediately, or who want to remove it from the market for short periods of time. It does not qualify as an ISA cash component but the HM Revenue & Customs deduct a 20% flat rate charge on the interest which is not reclaimable. Cofunds will remind you that the HM Revenue & Customs regulations state that cash can only be held temporarily within a stocks and shares ISA in their annual statements.
Key things to note:
- The movement of cash to and from a Cash Reserve facility is subject to the same switching arrangements and charges as investment funds.
- Interest rate is 0.4% below the published base rate of the Bank of England. Members will receive whichever is higher the stated rate or zero.
- Interest is paid half-yearly, shortly after 31st October and 30th April
- Interest will always be re-invested into the Cash Reserve. This will be the case even if the client has subsequently switched from the Cash Reserve into funds.
- Interest on the balance will not be paid if the amount accrued is less than £10
- Cofunds pay advisers 0.5% per annum in on-going commission on the Cash Reserve balance. This is shared with you as documented in the rplan charges.
To read more information on the Cash Reserve you need to unfortunately look through the Cofunds Terms and Conditions.