Tax Efficient Investments


EIS/SEIS

One of the most effective ways to invest in UK small companies is through an Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS). The government offers a number of tax breaks through these schemes which can reduce your tax bill. The benefits include:

  • 30% income tax relief on EIS investments of up to £1million in any tax year – this is also available on an investment of up to £1million backdated to the previous tax year

  • Capital gains tax deferral and CGT eliminated if held at death

  • 100% inheritance tax relief (after two years as long as you still own the shares when you die)

  • Tax-free growth

  • Up to 45% loss relief

The investment has to be made for at least 3 years to retain these tax reliefs.

 The availability and extent of tax benefits depends on your personal circumstances and is subject to change.

At cbw we have experience of setting up EISs for clients as well as putting investors in touch with an approved EIS to invest in.

 

Corporate Bonds

For clients with surplus cash, corporate bonds are an attractive way of gaining a higher return than bank deposits but lower risk than shares. As well as getting the principal amount back, the investor also earns a regular income. The attraction of corporate bonds is that certain types can also be held in a tax wrapper thereby protecting clients from further tax. There are a wide variety of bonds available depending on clients’ circumstances.

 

Pensions

Pensions are a tax efficient way of investing in certain investment classes such as property and shares. By setting up a SSAS or a SIPP, clients can invest through shares, make loans, borrow funds and enter into scheme transactions with scheme members and connected parties. The income and capital gains from most pension schemes are not taxable.  Clear Blue Water has experience of helping clients in this area.