When you have funds that you are not using, you will want to put your money to work and invest it to increase its value. You can make many different types of investments, but you must be careful to ensure that it is tax efficient and that any profits you make, you do not have to give a large chunk of them to the tax man. You can seek investment advice from a professional who can help you with this quandary, and there are various suggestions they will have. Below you can see some of the investments they recommend that are tax efficient and may suit you and your circumstances.
Invest In A Pension
One of the most effective tax-efficient investments you can make is investing in a private pension. You can grow your pension pot in a tax-free environment that can ensure that you will be comfortable in later life, and there are various pension providers you can choose. A popular option with experienced investors is choosing a Self-Invested Personal Pensions (SIPP), which may suit your circumstances. Seek advice from a pension specialist who can help you select the best option and help you grow the value of your pension without changing your tax liabilities.
Enterprise Investment Scheme
Another option that you can consider, which is tax-efficient, is putting your money into an Enterprise Investment Scheme. The scheme was set up by the UK government and can help people invest in smaller businesses and offer them tax incentives for doing so. It can also help investors mitigate the risk of their investment in this scheme and allows them to defer or reorganise their capital gains tax liabilities to suit their circumstances.
Individual Savings Accounts (ISAs)
You can also put your money into Individual Savings Accounts, also known as ISAs, which is one of the most well-known options available. Investing in an ISA offers excellent tax savings, and there are different ISAs from which you can choose that may be suitable for your circumstances and level of investment. Almost 40% of the UK adult population have an ISA, making it one of the most popular options available when investing.
Venture Capital Trusts (VCTs)
Another popular investment vehicle which is also tax-efficient is Venture Capital Trusts, which can be an excellent investment for your portfolio. A VCT is a company that is listed and pools investments together, and then distributes the funds across a managed portfolio of companies. They will often have a broad range of different companies the VCT invests in, but to maximise the benefits you receive from this type of investment, you must hold it for a minimum of five years. Whether this is the best option for you and your circumstances depends, and you will want to seek professional financial advice before jumping in with both feet.
These are some of the most popular tax-efficient investments currently available in the UK that offer varying levels of return. Always research any potential investment thoroughly before giving them your money, and seek professional advice from a financial expert.
