Posted on: 1st February 2022
From saving to investing, ways to relieve taxes are among the biggest considerations in making a difference to overall wealth and quality of life. When looking at how to plan your finances out effectively and save money on tax, there are several avenues where an independent financial adviser can help investors with tax efficient investing through advising on the numerous options open to them.
In the UK, investors have several tax-efficientproducts introduced to encourage saving and .
Enterprise Investment Scheme
EIS was created as the successor to the British Expansion Scheme to promoteinto unlisted early-stage businesses.
Although it has undergone various changes throughout the decades since it was established in 1994, it still is focused on the same core areas in offering investors the ability to back unlisted businesses that represent higher risk due to their early-stage status and lack of liquidity.
This is offset by tax reliefs – including income tax relief of 30% on capital gains relief on invested gains and exemption on growth. EIS shares qualify for loss relief on net invested amounts if they are not producing a return.value – as well as
Seed Enterprise Investment Scheme
SEIS was introduced in 2012 to cater for the earliest business seeking to invest. This scheme provides support for up to £150k of external equity capital that a business raises within its first two years. This provides attractive incentives for investors towards earliest stage businesses.
These have the highest level of risk for investors, with 50% income tax relief upfront and reinvestment relief that provides investors with the ability to reclaim 50% relief on invested gain. Along with the capital gains exemption on disposal and loss relief, these ensure a potential total exposure of around 13.5%.
Venture Capital Trusts
VCTs have a different structure forthat allows for a wider range of companies, though reliefs are similar.
A VCT is a listed company that pools to distribute and build a managed portfolio of investments into eligible businesses. VCTs hold a more diverse portfolio of investments into early-stage unlisted and AIM listed businesses on behalf of investors.
This allowsinto later-stage businesses, but the reliefs are less generous – representing the reduced risk profile of the companies.
These are just some of the ways a financial adviser can help with tax efficient investing advise, how to reduce taxes, investment advice Manchester and VCT Manchester. Contact the team at today to enquire further about how to make investments more attractive for 2022.