Doesn't your financial future deserve advice that is
independent?
Some investors may have had a roller-coaster ride in recent years. A market fall can happen at any time. In years past, they’ve been triggered by natural disasters, oil price spikes, wars, bank collapses – and now there’s the eurozone debt crisis. The reality is that market swings happen often, and when they do, it can be unsettling for many investors. Read the rest of this entry »
One in four retired homeowners hope to raise £62,000 by moving into a smaller home
Nearly three quarters (73 per cent) of the UK’s 10.4 million pensioners own their own home, although more than a quarter (26 per cent) expects to sell their property to raise money or simply to make their life easier, according to new research from Prudential. Read the rest of this entry »
“Look after the pennies and the pounds look after themselves” is an age-old saying dispensed to children as they learn the basics of money. However, adults may want to take heed of their own wise words before they reach retirement, as almost two million retirees currently have less disposable income than a child. Read the rest of this entry »
Finding the right offshore investments can be a key factor in making the most of your wealth, and it’s not only for the wealthiest of investors. With a few well-advised decisions you could broaden your investment portfolio. Read the rest of this entry »
Attractive tax breaks as part of a diversified investment portfolio
Enterprise Investment Schemes (EISs) are tax-efficient vehicles set up to encourage investment into small, unquoted trading companies. Following the changes announced in various Budgets, the EIS is the only tax-efficient investment offering a capital gains tax (CGT) deferral. CGT on the disposal of other assets can be deferred by reinvesting the proceeds in EIS shares. Read the rest of this entry »
Wealthier investors taking a long-term view
A Venture Capital Trust (VCT) is a company whose shares trade on the London stock market. A VCT aims to make money by investing in other companies. These are typically very small companies that are looking for further investment to help develop their business. The VCT often invests at an early stage in a companyís development, so it is a higher risk investment. This means that the VCTs are aimed at wealthier investors who can afford to take a long-term view and accept falls in the value of their investment. Read the rest of this entry »
Not sacrificing your life principles in exchange for chasing the best financial returns
For investors concerned about global warming and other environmental issues, there are a plethora of ethical investments that cover a multitude of different strategies. The terms ethical investment and socially responsible investmentí (SRI) are often used interchangeably to mean an approach to selecting investments whereby the usual investment criteria are overlaid with an additional set of ethical or socially responsible criteria. Read the rest of this entry »
Safeguarding your money at a time of low interest rates
How do you generate a reliable income when interest rates are stuck at all-time lows and the Bank of Englands quantitative easing policy of printing money is squeezing yields on government bonds (gilts) and other investments? Investors today can still rely on a well-balanced portfolio to meet their needs for income. However, they must be open-minded about the sources of that income, and recognise that low-risk income generation is a thing of the past. Read the rest of this entry »
Utilising tax deferral benefits to minimise tax liabilities
Finding the right offshore investments can be a key factor in making the most of your wealth, and itís not only for the wealthiest of investors. With a few well-advised decisions you could broaden your investment portfolio.
If appropriate, offshore bonds may provide an opportunity for your assets to grow in a tax-free environment. They also allow you to choose when any tax liability becomes payable. There are a number of other tax benefits with offshore bonds, especially if you have spent time living abroad. But they are complex structures that require professional financial advice.
International finance centres
While many investors will be aware that investing in an Individual Savings Account (ISA) or pension can help reduce their tax bill, you may be less familiar with offshore bonds. Like pensions and ISAs, offshore bonds are effectively ëwrappersí into which you place your investments, for example, funds or cash. They are offered by life insurance companies which operate from international finance centres.
The main tax benefit of investing in an offshore bond is gross roll-up. This means that any underlying investment gains are not subject to tax at source ñ apart from an element of withholding tax. With an onshore bond, life fund tax is payable on income or gains made by the underlying investment. This means your offshore investment has the potential to grow faster than one
in a taxed fund.
Tax deferral
As long as investments are held within the offshore bond wrapper, you donít pay any income tax or capital gains tax on them and you can switch between different funds tax-free. While you do have to pay tax on any gains when you withdraw assets, there are
a number of ways you can potentially reduce the amount you pay.
You can withdraw up to 5 per cent of your initial investment every year for 20 years, and defer paying tax until a later date. If you are a higher-rate taxpayer now but expect to become a basic-rate taxpayer when you retire, you can defer cashing in your assets until retirement and possibly pay half the tax due on any gain realised.
New ownerís tax rate
You can assign (transfer ownership) an offshore bond ñ or parts of it ñ as a gift without the recipient incurring any income or capital gains tax, although this may cause an Inheritance Tax (IHT) liability if you were to die within seven years. All future tax on withdrawals will be charged at the new ownerís tax rate, if any. This can be a tax-efficient way to help fund your childrenís university fees, for example, since your children are likely to be low or non-earners as students. Putting an offshore bond in a trust could help your family reduce or avoid IHT, provided you live for seven years after setting it up.
Understand each jurisdiction
Investor compensation schemes tend not to be as developed as in the UK, so you should always obtain professional advice to ensure that you fully understand each jurisdiction. It is also important to ensure that you are investing in an offshore investment that is appropriate for the level of risk you wish to take.
If you are an expatriate you should make sure that you are aware of all the investment opportunities available to you and that you are minimising your tax liability.
A tax-efficient wrapper for your fund choices
Individual Savings Accounts (ISAs) were introduced in April 1999 by the Government to replace Personal Equity Plans (PEPs) and Tax Exempt Special Savings Accounts (TESSAs). During this current tax year you can shelter up to £11,520 from tax by investing in an ISA. Read the rest of this entry »
