Tax-efficient savings help fund your future

When people have spare cash in the bank, the first place they will often look to put the money is in an ordinary savings account. The interest earned on those savings can be a good rate, but the tax deducted from that interest may effectively reduce the rate.

Consideration should, therefore, be given to investing in the broad range of tax-efficient savings schemes:

Individual Savings Accounts (ISA)

These are probably the most well-known of the tax-free investments available. Any return on savings within an ISA is tax-free.

The annual limit on investment is currently a total of £15,240 over one cash ISA and one Stocks & Shares ISA. Junior ISAs, for those under 18 are also available, with an annual limit of £4,080. Taking the money back out of an ISA does not give back these allowances.

It is also possible to transfer shares to an ISA from certain company share option plans (CSOPs) if you have the spare annual limit.

Other Tax-Efficient Savings and Investments

Some National Savings and Investments (NS&I) products, such as Savings Certificates or Premium Bonds, do not have a tax on any payments of returns.

Investing in shares in Venture Capital Trusts (VCT shares) creates an income tax deduction, reducing your income tax liability by up to 30% of the amount invested for the year of investment. VCT shares are also exempt from capital gains tax (CGT), and dividends on the first £200,000 of shares purchased each year are exempt from income tax.

Shares purchased under the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme also create an income tax reducer at 30% and 50% respectively of the amount invested for the year of investment. An unused deduction can be carried back to the prior tax year. EIS & SEIS shares are also exempt from CGT.

Tax Innovations has extensive experience in all aspects of tax efficient savings and investments, as well as planning for retirement. Our dedicated team of experienced tax advisors are ready to advise you on the best way to save and plan for your retirement, tailored to your own particular needs.

If you would like more information regarding tax efficient savings and investments, or other aspects of retirement planning, please contact Tax Innovations on 01962 856 990 or customerservice@taxinnovations.com.

For an initial consultation please call us on 01962 856 990 or visit our contact page.