When creating your bespoke portfolio, your investment manager will take into account any tax ‘wrappers’ that can be used to reduce your exposure to tax.
These include Individual Savings Accounts (ISAs), Junior ISA’s (JISAs), Self Invested Personal Pensions (SIPPs) and Offshore bonds. Originally designed by the government as a way of encouraging people to save, each year, savers over the age of 16 are able to make use of an ISA ‘wrapper’. This allows a level of tax protection of up to £20,000 (from April 6, 2017) each tax year. There are two main types of ISA – Cash, and Stocks & Shares. From time to time, the government raises the ISA threshold. In April 2017, this threshold was raised from £15,240 to £20,000.
A SIPP is a government approved pension scheme, designed to help you save for retirement. A SIPP allows tax relief when you invest your personal pension, whilst giving you greater control over investment decisions.
Typically pensions can only be invested in a limited number of funds, however you can invest a SIPP in funds of your own choosing. This type of pension offers up to 45% tax relief on contributions, and you are also exempt from capital gains or income tax.
From the age of 55, you can start to access your SIPP either as a drawdown or as a lump sum. You can discuss this with your investment manager who will be able to guide you as to the best option to make your SIPP last throughout your retirement.
As with ISAs and SIPPs, there are tax benefits to including offshore bonds in your investment portfolio.
A UK bond is a loan to a company or government (a "gilt") which, in return, provides a fixed rate of interest.
By contrast, an offshore bond is not taxed locally, so over the long term investors can benefit from compounded income and gains.
Income within the bond will only be subject to tax upon encashment of the bond.
A benefit of having a dedicated Quilter Cheviot investment manager is that they will have a detailed understanding of your portfolio, know how best to use the incentives and allowances available, understand the impact of selling your investments and will avoid any unnecessary taxes.Why Quilter Cheviot
Come and see us so we can start working to get you closer to your personal financial goals.
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