The UK government offers a range of schemes designed to support and encourage tax-efficient investments and thereby help you reduce your tax liabilities.
There are various ways you can minimise your tax liabilities by investing in schemes such as individual savings accounts (ISAs), self-invested personal pensions (SIPPs), venture capital trusts (VCTs), business property relief (BPR), the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).
ISAs are the most common way for you to invest and grow your savings through a tax-free scheme. The interest you gain from cash invested in an ISA and the investment returns are exempt from tax.
The main types of ISA are cash, stocks and shares, lifetime, help to buy, junior, and innovative finance. In most cases, you can withdraw money from your ISA at any time free of charge.
There is an allowance as to how much you can put into an ISA each year, which is stipulated by the government. For the 2018/2019 tax year, the maximum you can invest in an ISA is £20,000. This is the total across all your ISAs combined, if you make use of more than one arrangement. For a lifetime ISA, you can only invest up to £4,000 in this tax year, and the allowance for a junior ISA currently stands at £9,00.
Pension investments also offer attractive tax incentives. Schemes such as small self-administered schemes (SSASs) for SMEs and self-invested personal pensions (SIPPs) for individuals can be effective arrangements for providing retirement benefits, as well as for obtaining tax relief at the time contributions are made.
For expert advice regarding tax-efficient investments and how to ensure you receive the maximum benefit, please contact a member of our tax team today.