Tax efficient investment
As soon as investment and taxation are muttered in the same sentence, people jump psychologically to exotic sun-drenched islands and morally questionable individuals. There’s been press coverage of numerous high-profile cases, *ahem* Jimmy Carr, in which large-scale tax avoidance has denied significant sums to the public purse; it leaves a bitter taste. Disclaimer, I should/must state that Mr Carr has subsequently reached agreement with HMRC, or so he states in his stand-up routine.
But this “irregular” financial practice shouldn’t discourage the honest and socially conscious from pursuing tax incentivised investments, in fact quite the opposite. Tax reliefs are offered by HM Government for a reason - in the North they’d say, “you don’t get owt, for nowt” – and many of these incentives are attached to schemes which promote small business, fund Research & Design and/or invest in socially responsible areas (healthcare, renewable energy etc).
The expertise within the respective investment providers, the time they can donate to these niche areas and the collective funds raised, are all key factors and economic drivers for the tax incentives offered. These structures have been analysed by governments across the political spectrum and reviewed independently, and the tax advantages have been retained due to the long-term effect on job creation, the environment and ultimately, tax revenues.
The UK is heralded as one of the best places globally to start a business and the inward investment these tax saving schemes generate is part of the reason for this – ASOS and Fever Tree are now household names, but both benefited from early-stage investment through government incentivised schemes. I can’t image a sunny afternoon in the garden without Fever Tree [and a fair amount of gin]!
ISAs and pensions are part of everyday language and everyday use, and investors are comfortable with the tax incentives provided on these saving schemes – tax free growth for instance. Investment into Green Bonds, Venture Capital Trusts (VCT), Enterprise Investment Schemes (EIS) and Business Property Relief (BPR) qualifying assets can also play an important part in financial planning. These schemes offer access to asset diversification and tax relief; Income Tax, Capital Gains Tax and Inheritance Tax (IHT) can all be reduced and/or deferred through the utilisation of certain investments.
An individual’s goals and attitude to risk are crucial whenever they consider investment and saving options, so sitting down face-to-face with an Independent Financial Adviser can be worthwhile. There are a wide range of tax efficient opportunities, spanning a range of risk profiles and offering a series of investor benefits, if you’d like to know a little more, please do not hesitate to contact me. All initial meetings/consultations are free of charge and no costs are incurred without a client’s knowledge and agreement. After all, Independent Financial Advisers are here to help!