Tax Favoured Investments
There are a number of ways to invest for tax efficient purposes, which provides investors with a wide range of choice suited to their own preferences and priorities. Here we outline four opportunities to consider when looking to maximise your potential investment return.
1. Individual Savings Accounts
Individual Savings Accounts (ISAs) are an excellent investment for higher rate taxpayers. The maximum allowance is £20,000. You must save or invest by 5 April for it to count for that year. If you don’t use the allowance it is lost.
2. Enterprise Investment Schemes and Seed EIS shares
Tax relief is available where you subscribe for shares qualifying for Enterprise Investment Schemes (EIS) or Seed EIS (SEIS) relief. A number of professionally managed EIS and SEIS investment funds exist which invest in a broad range of EIS and SEIS companies on behalf of investors.
3. Venture Capital Trusts
Venture Capital Trusts (VCTs) are specialist tax incentivised investments that enable individuals to invest indirectly in a range of small higher risk trading companies and securities. VCTs are companies in their own right and, like investment trusts, their shares trade on the London Stock Exchange.
4. Family Investment Companies
Family Investment Companies (FIC) can be a useful way to protect family wealth. The most appropriate structure will depend on the family’s circumstances and objectives. A FIC enables parents to retain control over assets whilst accumulating wealth in a tax efficient manner and facilitating future succession planning.Read more in our Tax Planning Guide
Prudent utilisation of the relief’s associated with tax favoured investments as part of a balanced portfolio can make a big difference to future investments’ returns. However, it is important to consider the risks associated with them and it is essential that professional advice is sought.
Please contact a member of our team on 01903 234094 to discuss any of these investments in further detail.