We seek to arrange your affairs in the most tax-efficient manner possible, using conventional investment products as well as trusts and similar structures designed to provide tax efficiency in what is an increasingly hostile tax environment.
Income Tax
Income Tax is a tax on income. Not all income is taxable and you're only taxed on 'taxable income' above a certain level. Even then, there are other reliefs and allowances that can reduce your Income Tax bill - and in some cases mean you've no tax to pay. Current rates and allowances of Income Tax can be found at: www.hmrc.gov.uk/rates/it.htm. Pension payments are a useful way of deferring tax. You may be able to pay further contributions to your pension, which can soak up some unused tax relief. If one spouse is a tax payer and the other is not, or pays tax at a lower rate, it is worth considering switching some investments to take advantage of their unused tax allowances.
Capital Gains Tax
Capital Gains Tax is a tax on the profit or gain you make when you sell or ‘dispose of’ an asset. You usually dispose of an asset when you cease to own it - for example if you:
- Sell it
- Give it away as a gift
- Transfer it to someone else
- Exchange it for something else
- Receive compensation for it - eg you receive an insurance payout when an asset's been destroyed. It's the gain you make - not the amount of money you receive for the asset - that's taxed. Current rates and allowances of Capital Gains Tax can be found at: www.hmrc.gov.uk/rates/cgt.htm
Onshore Bonds
An investment bond is technically a single premium life assurance contract although the life cover aspect is only nominal. A wide choice of managed, general and specialist funds are available offering investment opportunities in equities, property and fixed interest securities. There are basically two types of Onshore Investment Bond:
1. Unit Linked - These Contracts offer a wide choice of funds, often with a choice of Investment Managers. The facility to switch between funds and Fund Managers is often available without administrative charge.
2. With-Profits Bond - For the Investor requiring a lower rate of risk, the With-Profits Bond can offer an attractive proposition. The capital is largely protected against stock market swings. The returns to the Policyholder are smoothed by the Life Company Actuary to give a steady growing return. Whilst a Unit Linked Investment Bond is likely to deliver a larger return over the longer term, the With-Profits Bond serves as a useful compromise between full market exposure and deposit based investment.
The underlying funds of Investment Bonds are subject to tax on income and gains. Any ‘income’ you need is achieved by selling units.
Offshore Investment
Many offshore funds are operated by subsidiaries of well-known onshore institutions. Such funds are able to offer a wider range of investments than their onshore counterparts owing to the differing regulation offshore. Different types of regulation can mean less security but the very diverse nature of the offshore market means that generalisation can be misleading. Income distributing funds pay their income gross which is particularly attractive to non-taxpayers.
An offshore bond is liable for no UK tax and therefore grows virtually tax-free at a potentially higher rate. It is the offshore fund that is not typically subject to UK tax. UK investors may be subject to tax on distributions and/or on encashment.
The value of investments and income from them can fall as well as rise and you may not receive the full amount invested.
Investments in equities (stocks and shares) do not have the same degree of capital security as investments in deposits.
Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.
The Financial Conduct Authority does not regulate taxation and trust advice and some forms of offshore investments.