It’s Not Just About Tax and Net Returns
Choosing the right planning for you is not just a case of limiting the impact of tax on your investment vehicles in order to give you the biggest pot of money to hand. While this is a given, there are other important considerations too.
For example, in the section titled Tax Drag on Investment Returns the relative merits of holding a particular asset in a collective fund were compared with those offered by holding it in an investment bond. In that example, the collective fund produced a better investment return because of its tax advantages in relation to dividend and capital gains tax mitigation, as opposed to the income tax regime of the investment bond.
However, the investment bond offers other advantages, such as delaying tax and putting sums into trust. In addition, you do not have to account annually for the income and capital gains accumulated. This means that you do not have annual accountant costs and have a much simpler investment to manage, particularly for a trust.
Furthermore, even outside of a trust, an insured investment bond provides protection from losing this asset to the local authority for someone who may need long term care.
The choice, therefore, between an investment bond and a collective investment (ignoring other options for the sake of simplicity) depends on your personal circumstances and objectives. If you are saving for your retirement then net gains are the most important but if you have been retired for some time you may be looking to preserve your estate and assets; these are two different objectives requiring different tax efficient investments.
When making decisions on financial planning, the above is an example used that highlights the different options you may wish to discuss. Taxation is certainly one of the most important.
I advise on the following key areas of taxation planning:
– Corporation Tax
– Income Tax
– Savings Tax
– The Taxation of Dividends
– Capital Gains Tax
– Inheritance Tax
Many of these taxes can be used collectively, utilising your personal allowances and those of your family in order to reduce your tax burden by drawing pension income; ISA income; liquidation of capital gains in a systematic manner; contributing to a pension, and taking dividends instead of taxable income as well as preserving your estate.
If you have a question or would like to arrange an initial meeting at no cost and without obligation, call Nigel on (01295) 660571 or request a call-back.
