Tax Efficient Investment

Managing the tax-efficiency of your investments is an important part of your financial plan.  Your Wealth Manager will ensure that you are taking advantage of all the available opportunities.

There are savings and investment options with beneficial tax treatments, defined by HM Revenue & Customs, so your plan may involve some or all of the following options:

Individual Savings Accounts (ISAs) – usually the first option for tax-efficient savings. ISA savings are held in either cash or stocks and shares – or a mixture of both. Interest or growth on savings in ISAs remain tax-free while held within the ISA package.    There’s a limit on the amount you can save in an ISA each year: the limit for the 2019-20 tax year is £20,000.   If you have existing ISA savings you may want to review them to see if better rates can be obtained and, if you change provider, you must ensure it’s done using an ISA Transfer to maintain the preferential tax treatment.

Help to Buy and Lifetime ISAs – provide tax-efficiency if you wish to build up savings for two significant lifetime events: buying your first home and retirement.  Subject to certain rules, the Government will provide a bonus to the ISA saver when the money saved is used for these purposes.

Other specialist ISAs are available such as the AIM ISA, but these are only suitable in certain circumstances.

Junior ISAs (JISAs) – can be set up for children under the age of 18.

Savings Accounts (such as those with Banks and Building Societies) – generate interest up to the Personal Savings Allowance (PSA) and can also be tax-efficient.  The PSA was introduced in April 2015 giving basic rate taxpayers up to £1,000 of savings income free of tax.  Higher rate taxpayers get an allowance of £500, but no allowance is granted to additional rate taxpayers.

Investments and savings held with National Savings and Investments (NS&I) are also tax-efficient and include index-linked certificates, fixed interest certificates and Premium Bonds.

A number of specialist tax-efficient investment options are also available such as:

Venture Capital Trusts (VCT)

Enterprise Investment Schemes (EIS)

Seed Enterprise Investment Scheme (SEIS)

Past performance is not a guide to future returns. The value of investments can fall as well as rise. Investors may get back less than invested.