We help our clients invest tax efficiently, to ensure that they take advantage of every appropriate tax relief or tax exemption that fits with their overall investment strategy.
There are number of ways to invest tax-efficiently, each with their own focus and benefits, giving our clients the ability to choose an approach best suited to their priorities and personal circumstances.
Individual Savings Accounts (ISAs)
Capital invested into an ISA is allowed to grow in a tax-free environment, meaning that any income (interest for Cash ISA or dividends or capital growth for Stocks & Shares ISA) is exempt from the respective taxes.
Each year an individual can invest £20,000 into a cash or equity ISA or a mixture of the two.
Pension contributions up to the Annual Allowance of £40,000 or 100% of income, if lower, can be made with tax relief at the prevailing rate of income tax. This allowance tapers if your income is over £150,000. This means that for every £2 of income over the £150,000 threshold, your annual allowance is reduced by £1. The maximum reduction is £30,000, therefore if one’s annual income reaches £210,000 or more, the annual allowance is reduced to £10,000. However, you can make use of three previous years’ unused allowances.
It is also possible to make employer contributions and over your personal income level, but still limited by the Annual Allowance rules (above)
Specialist Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSASs) are pension wrappers designed for business owners that are controlled by the scheme beneficiaries and allow members to invest into a wide variety of assets to achieve growth. As with all pension schemes, they provide tax relief at the prevailing rate of income tax, meaning that for a £100 pension contribution would cost a basic rate tax payer £80 and an additional rate tax payer £55.
Enterprise Investment Schemes (EIS)
A scheme designed to promote investment into unlisted early-stage businesses with the benefit of loss relief to offset a loss made on an EIS company against either the capital gains tax (CGT) bill or income tax bill, depending on which better suits the client’s needs.
An EIS offers tax relief and tax-free income (tax-free dividend). Income tax relief of 30 per cent can be claimed upfront and any dividends paid are not subject to income tax without effecting the dividend allowance for the year.
Claiming loss relief against income tax – you may be able to offset a loss against an income tax bill for the current or previous tax year. The amount of relief is worked out by multiplying the value of the effective loss and your marginal rate of income tax (basic at 20 per cent, higher at 40 per cent and additional at 45 per cent).
Claiming loss relief against CGT – may offset a loss against the CGT bill for the current or future tax years. The relief is calculated by multiplying the effective loss by the rate at which you pay CGT (basic rate at 10% and higher at 28%).
Venture Capital Trusts
A managed investment structure, which holds a diverse portfolio of investments into early stage listed and Alternative Investment Market (AIM) listed businesses on behalf of the investors. The VCT must be held for five years.
A VCT offers tax relief and tax-free income (tax-free dividend). Income tax relief of 30 per cent can be claimed upfront and the dividends paid are not subject to income tax without affecting the dividend allowance for the year.
Your investments may fall as well as rise and you may not get back what you put in.
VCTs are high risk investments and there may be no market for the shares should you wish to dispose of them. You may lose your capital.
Enterprise Investment Schemes (EISs) are very high-risk investments. An EIS investment is usually concentrated in one single unquoted trading company. Often there is no market for the shares and it may therefore be very difficult to make a disposal. There is a possibility of the chosen company failing.
We provide financial planning to help our clients make informed decisions about money and establish what is important to them.
Inheritance Tax Planning
We help clients structure their assets to safely control succession and minimise tax.
Pension and Retirement Planning
The right solutions to best meet your retirement needs and requirements for income.
Annual Investment Review
We offer an annual Face-to-Face review of investments under management and the client’s situation.
Quarterly Rebalancing Service
We offer a portfolio review in which we construct, amend, provide commentary on and rebalance our clients’ investments.
Tax Efficient Investment
We help our clients to invest tax-efficiency, giving them the ability to make a choice suited to their knowledge and risk preferences.
There are a range of insurance and protection plans that can help cover you and your family in the event of ill health or early death.
Ethical funds are increasingly popular. More and more of our clients are placing greater emphasis on a socially responsible approach to investing.
Modern Money Financial Services Limited is authorised and regulated by the Financial Conduct Authority: 150571. Registered in England: No. 2459464. Directors: M Paine, L Edmunds
The Financial Conduct Authority does not regulate tax or estate planning
The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK
© Modern Money Financial Services Ltd 2019