Deal of the Week - L&G rebates Isa charge

Legal & General is offering to rebate half its annual management charge for
2010 on new individual savings account (Isa) investments made before April 30.

The cashback offer covers a wide range of fund-based Isas from the life insurer, including index trackers, actively managed funds, and income-oriented plans.

It is available to new and existing customers, including those transferring a lump sum of at least £3,600 from another Isa firm.

The minimum required for a new Isa is £3,600. The charge refund will be made in February 2011. Is this good?

The one-off rebate could be worth up to 0.75 per cent of a fund Isa’s value. On a £3,600 investment, this would equate to a saving of about £27.

For a low-cost tracker fund, however, the saving is a lot less. For example, L&G’s popular UK Index fund has annual charge of 0.4 per cent, so the refund would be 0.2 per cent – about £7.

An extra rebate of up to £50 could be claimed by subscribing via a cashback website such as Quidco.com.


What’s the catch?

The cost-savings could be easily outweighed by short-term stock market falls, so investors shouldn’t be swayed by the April 30 deadline. Some analysts urge caution over equity investments at the moment.
What’s the alternative?

Selftrade, the online stockbroker, is offering commission-free trading to earlybird Isa investors.

Those paying in more than £10,000 (up to the new £10,200 stocks and shares Isa limit) by 30 April receive 10 free trades worth £12.50 each. Subscriptions of £5,101 to £10,000 receive three free trades; smaller investments are given one free trade. All trades have to be used by May 31 2010.

Some investment brokers, including Hargreaves Lansdown and Cavendish Online, rebate annual commissions on fund Isas. These can be worth 0.5 per cent a year in some cases. How do I find out more?