Savings & Investments

20th May 2013

Tax efficient savings and investments
With interest rates at rock bottom, we look here at a range of tax advantaged savings options.

Pension savings

The Government encourages pension savings by providing tax relief on pension contributions.  Tax relief reduces your tax bill and/or increases your pension fund. The profits made whilst within the pension fund are free of income tax and capital gains tax.
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Individual Savings Accounts (ISAs)
The ISA annual subscription limit for 2013/14 is £11,520, of which up to £5,760 can be provided in cash savings.

A Junior ISA is a long-term saving plan for children under the age of 18.
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Enterprise Investment Scheme (EIS)
The EIS is an investment vehicle offering numerous tax reliefs to the investor in order to attract investment into small unquoted companies.
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Seed Enterprise Investment Scheme (SEIS)
This scheme sits alongside the EIS and allows up to £100,000 to be invested in the first year, with an additional £50,000 available for subsequent years subject to a total limit of £150,000.
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Venture Capital Trusts (VCTs)
VCTs are part of a scheme that provides tax relief to individuals on investments made in small businesses not listed on a recognised stock exchange. Income tax relief is available when you subscribe up to a maximum of £200,000 of shares in any given tax year and these are held for a period of at least five years.
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Capital gains tax exemption
Perhaps the most frequently overlooked and unused tax-free allowance available to individuals is the annual capital gains tax exemption, currently set at £10,900 for the 2013/14 tax year. This tax-free amount is in addition to your income tax personal allowance.
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Investment bonds
An investment bond is a vehicle offered by life assurance companies and, although strictly an investment, it is deemed to be a life policy and thus outside the scope of the traditional CGT framework.
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We can advise on the best tax efficient savings option for you. Please talk to us to find out more.

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