Well a summer at last although we Brits love to complain that it is too hot! As I write this Andy Murray has done what we dreamed he might and won Wimbledon, England have won a compelling first test in the Ashes series and the British and Irish Lions have won their first series for 16 years. The summer will continue as a sporting extravaganza and so writing about finance may seem rather dull in comparison but here goes……
It is the time of year when tax returns need to be completed and it got me thinking about tax efficient investing. Whether investing for capital growth or to produce income, careful planning will not only help you invest in the right assets but will also make sure this is done in a tax efficient manner. As taxation rules change it’s important to take professional advice to ensure you do not pay more than you have to and at Lyndhurst we can provide you with that advice.
During the 2013/14 tax year you can invest up to £11,520 in Cash and Stocks & Shares ISAs. You can invest the full amount in a Stocks & Shares ISA or up to £5,760 in a Cash ISA with the balance in a Stocks & Shares ISA. There is no capital gains tax and no further income tax to pay within an ISA. If you are married, or in a registered civil partnership, ensure that you both consider using your ISA allowance.
For eligible children, this tax year you can invest up to £3,720 in a Cash or Stocks & Shares ISA with the same tax benefits as above.
You have to pay tax on any profits you make on an investment bond, however, you can normally control when you pay this tax. These bonds are ideal for a range of needs including estate and retirement planning, tax-efficient saving or even if you are planning to retire abroad.
I’ve written a fair bit about pensions over the last two months but it is worth repeating some of the salient facts. For this tax year the annual allowance, the upper cap on total contributions that can be made to your pension in one year and benefit from tax relief is £50,000 although this will reduce to £40,000 from April 2014. Personal contributions also have to be within 100 per cent of your relevant UK earnings to obtain tax relief.
Even if you have no earnings or you don’t pay tax, anyone under 75 can still invest £2,800 in a pension and the taxman will top up their contribution to £3,600. Not a bad deal if you ask me!
I hope the above give you a feel for some of the ways you can take advantage of the current tax efficient savings available to all, if you would like further information please contact me on 01582 715777
Lyndhurst Financial Management Limited.
Authorised and Regulated by the Financial Conduct Authority.