Keydata Progressive Growth Plan has become the first of around 90 products based on the Barclays Sim...
Keydata Progressive Growth Plan has become the first of around 90 products based on the Barclays Simple structure to mature.
The plan, which uses the Structure Investment Management Plan Linked to Equity (Simple) structure, paid out 110% of initial investment a year after launch as the growth in the FTSE 100 index was enough to trigger the early maturity feature.
There has been speculation investors could be liable to income tax on the proceeds of the product rather than capital gains tax. The Inland Revenue does not provide upfront advice on the tax position of products.
Keydata and Barclays, which took legal advice on the product's tax status, remain confident investors will be able to put returns against their capital gains allowances on the grounds they were not certain of returns and hence it does not count as income.
Final confirmation will not come until the Inland Revenue scrutinises tax returns for the 2004/2005 tax year next September however.
The majority of Progressive Growth Plan investors have taken the proceeds although a number have rolled over into Keydata's Defined Growth Plan, which also utilises the Simple structure.
Simple is essentially a Barclays bond issued and redeemed at par. The plan manager for each product, in this case, Keydata, uses the proceeds from selling the bond to buy a warrant that subsequently converts into preference shares, with the latter used to provide the upside linked to an index.