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.
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.
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.
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.
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.
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.
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.
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.
We can advise on the best tax efficient savings option for you. Please talk to us to find out more.