Tax Tip #9 USE TAX EFFICIENT INVESTMENTS
You should consider investing in some of the tax efficient investments available, such as the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCT). These can significantly reduce your tax bill, as well as providing you with attractive potential investment returns.
The EIS, SEIS and VCT are all based on government legislation and can significantly reduce the income tax and capital gains tax you pay. There are also potential IHT benefits with EIS and SEIS.
Unlike aggressive tax planning strategies, these non-aggressive investments, aim to encourage investments in small British trading companies, in return for valuable tax benefits.
30% income tax relief is available on investments of up to £1 million and £200,000 in new EIS and VCT shares respectively, whilst SEIS investors benefit from 50% income tax relief on investments of up to £100,000. These vehicles can also be used to significantly reduce or even remove your CGT bill.
Importantly, it should be noted that the tax laws governing VCT and EIS are regularly changed. Also, the difference in risk and the potential rewards vary significantly between different investments. It is therefore important that you speak to a specialist Chartered Financial Planner, such as Wealth & Tax Management, to help guide you through these opportunities.