Savings & Investments

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ISAs are important retirement planning tools as well as being useful when saving up to buy a house.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.

What are the benefits of a Stocks & Shares ISA?

ISAs are tax efficient investments, where there is no capital gains tax payable within the product wrapper, and there is no tax to pay when you withdraw funds from the wrapper.

Why would I start an ISA?

An ISA is an important part of your financial plan and you should be trying (if possible) to max out your annual ISA allowances each year, as this could then form an important part of your retirement pot.

Should I set-up an ISA for my kids?

If you can afford to, then yes. Starting a Junior ISA early on for your kids is a brilliant thing to do and they will reap the benefits.

There have been numerous changes to ISAs over the last couple of years, namely:

• Changes to the annual ISA allowance threshold to £20,000 p/a.
• Ability to put money into an ISA, take it out and then put it back in within a tax year.
• No difference between a Cash ISA and a Stocks & Shares ISA anymore. All ISAs are now NISAs (New Individual Savings Account) where, as mentioned, the annual allowance is now £20,000 p/a (17/18 tax year). In a NISA you can contribute as much cash or invest in stocks / funds up to the cumulative annual allowance.

Because of the changes in regulation, ISAs are now a very important part of our retirement pots, in addition to pensions, Buy-to-Lets, etc. An ISA is an essential saving and retirement planning tool for everyone.

We can advise on what Stocks & Shares ISA is most suitable for you. Please get in touch if you have any questions.

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Personal portfolios are typically for higher net worth people who wish to invest excess funds in a risk managed way.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

One of the major benefits of a personal portfolio, held under a digital platform, is that the investor has access to 1000’s of funds and can adjust the investment without too much trouble.

Also, investors can contribute to the personal portfolio in a flexible manner which suits people who have both regular or less regular income.

Personal portfolios can be used as a stop gap for topping up and using annual ISA allowances.

A Personal Investment Portfolio can offer access to thousands of funds and equities, investment trusts, unit trusts, structured products as well as exchange-traded funds (ETFs), so it is a diverse way of investing.

If you are thinking about investing in a personal portfolio, you will need to consider the taxation of your investment, the risk management of the investment and the overall purpose of the investment and its investment horizon.

I provide bespoke long-term investment advice and solutions to all my clients and can help work out the optimal solution for you. Feel free to get in contact to discuss your requirements, I would be delighted to hear from you.

Not sure what to ask? Call today on 01628 308138

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Offshore Bonds may be useful for people looking to grow money in a tax efficient way.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

There are many guides to offshore investment bonds on the internet, as a result, I will simply provide a brief overview of what this useful product does and how it might be beneficial:

An offshore bond is a useful tax planning tool. However, unless you are planning to move abroad, then their main utility is the ability to defer paying tax on income or proceeds of the bond to a time or circumstance where you pay a lower rate of tax.

The bond will benefit from growing in a tax-free environment (offshore) and the policyholder can withdraw up to 5% of the bonds value per year (up to a total of 100% of the original investment) without incurring an immediate tax liability. This allowance rolls up so if you don’t use all of it in one year it rolls on into the next year, e.g. if you made no withdrawals in the first 4 years, you could take 25% of the original investment in the 5th year without an immediate tax liability This is particularly useful for higher rate taxpayers who are looking for a tax efficient income source.

Essentially, if funds withdrawn are within the 5% per annum limit, then tax is only due on encashment of the bond, or :

If the accumulated withdrawals are total more than 100% of the original value of the investment.

The bond can be set-up based on multiple lives, for example, let’s assume that the ‘lives assured’ are the settlors (the couple who set-up the policy) and the settlor’s children. This means that when the settlors die the bond continues to exist as the children are still alive and they effectively become the policyholders so there is no tax liability due until the children die, surrender the bond, or make withdrawals that exceed the limits described above.

The benefit of this is that the original settlor’s (parents) can avoid paying tax on the income they take from the bond – subject to the above allowances/limits.

The offshore bond can be divided into segments and these segments can be assigned to the children or grandchildren. Please remember that children are not exempt from tax and if they exceed the limits above they may have to pay tax if any ‘chargeable gain’ exceeds their personal allowance.

Some of the benefits of offshore bonds are as follows:

• Low maintenance product which provides an efficient tax environment for growth;
• Can provide a tax efficient income;
• A tax efficient way to pass on money to grown up children at university;
• A low cost to set-up and run;
• The investment is likely to be diversified and can be risk managed and it is liquid, i.e. you can take your money out without penalty at any time;
• Offshore bonds should be seriously considered as an alternative to investing in property, especially if you are concerned the hassle of dealing with difficult tenants as well as the risk of holding a potentially illiquid asset.

Some of the disadvantages of offshore bonds are as follows:

• On encashment, chargeable event gains can suffer income tax up to 45%.
• As withdrawals from a bond are assessable to income tax, it’s not possible to use personal or trustee CGT allowance to reduce gains.
• Base cost of the investment is not re-valued on death for income tax purposes (chargeable event gains are assessable against original investment and any subsequent additional premium paid).
• Death of last of the lives assured on life assurance contracts will create a chargeable event (even if policyholders are still alive).
• Chargeable event gains reduce any available age allowance based on the total gain, not sliced gain.
• May not be suitable where ‘income’ interest exists inside a trust.
• Investment losses cannot be offset elsewhere.
• On death of the last of the lives assured, income tax and IHT may be due, depending on whether a trust / s have been used and what type of trusts.

Not sure what to ask? Call today on 01628 308138

Financial Planning for People & Businesses Across the Thames Valley

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Finance FAQs

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• About You Getting Off to a Good Start
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Useful for higher rate and additional rate taxpayers.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

What are Onshore Bonds and when are they useful?

Onshore Bonds allow investors access a range of investment funds which in turn can invest into a diverse range of asset classes. They are in fact very like Offshore bonds but have a different tax treatment.

What are the differences between Onshore and Offshore bonds?

Primarily, the tax treatment, where onshore bonds are taxed at source (at a basic marginal tax rate) and offshore bonds are not.

Onshore bonds are useful in the following situations:

• The bond holder can make future fund switches without tax implications.
• The bond holder already has sufficient assets subject to the CGT regime.
• If the bondholder is a basic rate taxpayer on bond surrender, there would then be no further tax to pay on encashment, unless the gain, when added to your income, makes you a high rate taxpayer.
• Fund switches can be made with fewer tax reporting considerations than is the case with an OEIC or Unit Trust.
• The 5% tax deferred ‘income’ facility under the Bond provides a regular, simple, means of meeting your requirements.
• The 5% tax deferred ‘income’ facility may be useful for a higher rate taxpayer who expects to become a basic rate tax payer when the Bond is fully encashed.

Disadvantages of Onshore Bonds

• Onshore bonds can be less tax efficient than collective investments;
• Non-tax payers will effectively pay tax that cannot be reclaimed;
• Gains are assessed as income and thus may affect eligibility for means tested benefits and/or personal allowances

Not sure what to ask? Call today on 01628 308138

Financial Planning for People & Businesses Across the Thames Valley

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Finance FAQs

A list of clear answers to questions frequently asked by my clients

Finance Jargon

A simple guide to help clarify the confusing terms and financial jargon

• Home
• About Me
• About You Getting Off to a Good Start
• Increasing Responsibilities
• Growing Your Wealth
• Planning a Safe & Secure Retirement
• Enjoying Your Retirement

• Savings and Investments
• Mortgages
• Insurance
• Business Planning
• Pensions and Retirement Planning
• Estate Planning

If you are planning to send your children to private school and / or university and you want to do this in a tax efficient way, planning early is vital.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Giving your children the best start in life requires planning.

If you are reading this you probably already have some idea of what to expect in terms of saving for school fees and perhaps now you are looking for an overview of school fees planning and some solutions:

• If you are thinking of putting your child through the private schooling system in the South-East / London region, you will need to put aside approximately £300,000 from prep school through to University.

• The average private school in the South East of England costs about £25k per annum per child, for a non-boarder.

• University fees and living costs in England and Wales on average amount to £15k per annum.

If are planning for your child’s future and would like a bespoke school fees planning service then get in touch for a no-obligation chat to discuss your options.

We are based in Bray village, Berkshire, just off the M4, only a 10 minute drive from Eton school.

Not sure what to ask? Call today on 01628 308138

Financial Planning for People & Businesses Across the Thames Valley

Contact Us

Ask a question or make a no obligation enquiry by email

Finance FAQs

A list of clear answers to questions frequently asked by my clients

Finance Jargon

A simple guide to help clarify the confusing terms and financial jargon