The UK tax system is notoriously complex, but the benefits of structuring your finances tax-efficiently can be huge. We can help you to do this while ensuring you are making the most of the available allowances, so you won't pay any more tax than you need to.

Using your tax allowances

The Government gives you various tax allowances and reliefs each year – and making the most of them can save you a lot of money. We can structure your finances to ensure you are making the most of your allowances, including those for:

  • Income Tax
  • Capital Gains Tax
  • Dividend income
  • Contributions into ISAs, pensions and other savings accounts

Book a no-obligation initial consultation to find out how we can help you with tax planning.

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Making sure your investments are tax-efficient

The more tax you pay, the harder your investments must work to achieve the same returns. Our financial planners can structure your investments tax-efficiently – from using simple accounts such as ISAs to taking advantage of your annual Capital Gains Tax allowance and setting up complex tax-advantaged investments.

“The real value comes with the tax planning that we can put in place – we can save clients (or at least their estates) a significant amount of money either now or further down the line.”

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Saving tax when it comes to retirement

Whether you are saving for the future or already taking an income, our financial planners can help you to make the most of the available allowances when it comes to your retirement. Some of the areas we help clients with most often include:

  • Making pension contributions, including using pension carry forward
  • Pension lifetime allowance protection
  • Taking income from your other accounts, such as ISAs
  • Leaving your pension untouched to potentially reduce an Inheritance Tax bill
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VCTs, EIS and other more sophisticated investments

Our financial planners can help you with more sophisticated tax-efficient investments, including Venture Capital Trusts and the Enterprise Investment Scheme. These investments offer investors great tax benefits as an incentive for their high-risk nature.

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Frequently asked questions

1. What is Income Tax?

Income Tax is tax you pay on income from sources such as employment or a pension. Most people have a tax-free personal allowance for income – this is currently £12,500. Basic-rate tax is then charged at 20% on income between £12,501 and £50,000. Higher-rate tax is charged at 40% on income between £50,001 and £150,000, and additional-rate tax is charged at 45% on income over £150,000.

In Scotland there are five different bands for Income Tax ranging from 19% to 46%.

2. What is Capital Gains Tax?

Capital Gains Tax is a tax charged on profit when you sell or ‘dispose of’ an asset that has increased in value. Disposing of an asset can include giving it away as a gift or swapping it for something else.

Everybody receives a tax-free allowance of £12,000 for Capital Gains Tax – any profits under this amount will not be taxed. The rate of Capital Gains Tax is either 10% or 20%, depending on whether you pay basic-rate or higher-rate Income Tax. However, these amounts increase to 18% and 28% for capital gains made on residential property.

3. What is an ISA?

An Individual Savings Account (ISA) is the most common and simplest account for tax-free saving and investing. Money held in ISAs is free from Income Tax and Capital Gains Tax. However, to offset these generous rules there is a limit to how much you can pay into an ISA each tax year. The annual ISA allowance is currently £20,000.

4. What is the dividend allowance?

Everybody receives an annual allowance for dividend income received from shares held outside an ISA. The dividend allowance is currently £2,000. Any dividend income above this amount will be taxed at 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers.

5. What is a Venture Capital Trust?

Venture Capital Trusts (VCTs) are ‘pooled’ funds that invest in smaller and younger companies. VCTs are high risk as these companies can struggle and fail, and their shares can also be difficult to sell. To offset these risks, VCTs offer tax benefits. These include a 30% Income Tax rebate on investments up to £200,000 each tax year, but only if you have paid the amount of tax being rebated and stay invested in the VCT for a minimum of five years.

6. What is the Enterprise Investment Scheme?

The Enterprise Investment Scheme (EIS) allows direct investment into small, unquoted companies (those that are not listed on the London Stock Exchange). Similarly to VCTs, EIS offers a 30% Income Tax rebate on investments up to £1 million. However, you must have paid the amount of tax being rebated and hold the shares for at least three years.

7. What is the Seed Enterprise Investment Scheme?

The Seed Enterprise Investment Scheme (SEIS) is similar to EIS, and encourages direct investment into start-ups. However, the tax benefits are more generous than EIS as these companies are younger and may not have fully developed a product or service yet. You receive a 50% Income Tax rebate on investments up to £100,000 as long as you have paid the amount of tax being rebated and stay invested for at least three years.

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Important information

VCTs are highly illiquid investments and only suitable for UK resident taxpayers who can tolerate higher risk and have a time horizon of greater than five years. You should only subscribe for new VCT shares on the basis of the relevant prospectus and you must carefully consider the risk warnings contained in that prospectus. Enterprise Investment Schemes are also tax advantaged products which are potentially higher risk, longer term and less liquid investments. They should only be considered once other planning opportunities have been fully explored and they should form only a small part of your portfolio.

Any tax treatment depends on the individual circumstances of each investor and may be subject to change and we would encourage you to seek independent tax advice before considering these investments.
