Investments / Tax

What are tax-efficient investments?

With UK tax allowances falling it can be useful to look at how you can structure your investments to ensure they are as tax-efficient as possible. There are a number of options to consider, including ISAs, pensions and bonds, alongside VCTs and EIS. But which should you choose? Claire Spinks, our Head of Tax Technical and Development, looks at some of the most common tax-efficient investments.

The UK remains a fairly high tax environment, and with frozen tax bands and falling allowances some investors are finding their returns are increasingly being squeezed. Making good investment decisions, whilst attempting to minimise any tax which could eat into returns, is a tricky balancing act. And whilst it’s also worth remembering that tax considerations shouldn’t dictate how to structure an investment portfolio, it’s an important factor to bear in mind.

At our recent webinar our team of experts looked at the range of investment options which are available to help ensure you are investing in the most tax-efficient way. And with 60% of webinar attendees reporting that they feel they’re paying more UK tax than they were five years ago, these can be worthwhile solutions to explore.

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The team took a look at some of the most common tax-efficient investments including ISAs, pensions, bonds, Venture Capital Trusts and Enterprise Investment Schemes, exploring how they work in practice and some of the benefits and limitations of each option. There was also time to consider some real-life client experiences, where the impact of tax-efficient investing could be seen in action.

The webinar also considered some of the typical tax problems which you might be facing. One of the most common issues occurs when the maximum pension contribution which can be made in any one tax year is reached. At present the annual allowance sits between GBP10,000 and GBP60,000, which may sound generous, but after factoring in your gross contribution and those of your employer, both elements the total can quickly add up – especially if you’re a high earner and only benefit from the minimum tapered amount. Other issues can arise with Capital Gains Tax if you are selling part or all of a business, a property or another asset. And if you’re non-UK domiciled with foreign income or gains from a remittance basis year, bringing money into the UK can trigger up to a 45% tax charge.


In these situations, and many others, considering tax-efficient solutions as part of your overall investment strategy can be particularly helpful.

To discuss any aspect of your investment plan please contact your nearest office.