Tax Tips with AWM: IHT

Tax Tips with AWM: IHT

Tax-Year-End (5 APRIL) is approaching FAST and its time to take full advantage of all those tax benefits and allowances, that not many people utilise.

This is Tip #4 of the blog series with the main topic of Pre-Tax-Year-End tax planning. If you missed Tip #1,#2 and #3 on Venture Capital Trusts and Enterprise Investment Schemes and How to maximise your allowances, head over to our blog page. 

The tax tips are to help make sure that you best utilise your Tax-Year-End options and today we focus on Inheritance Tax

What is Inheritance Tax (IHT)?

Inheritance Tax (IHT) is a tax on the estate (the property, money and possessions) of someone who has passed away.

How much IHT will I pay?

The current rate of IHT is 40%, each individual has a basic nil rate band of £325,000. There are various scenarios where this may not hold true, you may have an additional nil-rate band from either your late spouse or passing your main residence to a direct decedents. You may also have a reduced nil-rate band from gifts made throughout your lifetime.

We are experts in this field so click below for one of our advisers to give you an estate appraisal.

Residence Nil Rate Band (RNRB)

The Residence Nil Rate Band (RNRB) – also known as the home allowance -has been introduced recently. Provided certain conditions are met, the home allowance gives you an additional allowance to be used to reduce any IHT liability against your home.

The RNRB allowance is currently £150,000, but it will rise to reach £175,000 in 2020/21.

IHT Gifts, Reliefs & Exemptions

Some gifts and assets are exempt from IHT, such as wedding gifts and charitable donations. Relief might also be available on certain types of property such as farms and business assets.

You can gift up to a value of £3,000 each tax year,  click below to find out more on how we can help you optimise your gifting allowance.

*utilising these allowances are provider timeline dependent.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

Tax tips with AWM: Maximising your ISA allowance

Tax tips with AWM: Maximising your ISA allowance

Tax-Year-End (5 APRIL) is approaching FAST and its time to take full advantage of all those tax benefits and allowances, that not many people utilise.

This is Tip #3 of the blog series with the main topic of Pre-Tax-Year-End tax planning. If you missed Tip #1 and Tip #2 on Venture Capital Trusts and Enterprise Investment Schemes, check out the AWM blog. 

These tips are to help make sure that you best utilise your Tax-Year-End options and this week we focus on Maximising Your Allowances*

Maximise Your ISA Allowance

The maximum you can contribute to an ISA this tax year is £20,000. This is a very tax-efficient investment vehicle so please contact us if you want to discuss making further contributions or finding out if you still have any allowance remaining. Remember that if you don’t use the allowance now, you will lose it!
 
As part of the £20,000 ISA allowance, it’s also possible to invest up to £4,000 in a lifetime ISA which receives an annual government bonus of up to £1,000 a year. Under-18s or those who wish to save on behalf of a minor can put up to £4,368 into a junior ISA

Maximise Your Gifting Allowance

Everyone is able to gift £3,000 to someone and it will be immediately outside of your estate for inheritance tax. You can top this up to £6,000 if you didn’t use the allowance in the previous tax year too.

Top-Up Your Pension

Another way to reduce tax and at the same time boost your retirement pot is to make sure you use up your entire annual pension allowance, which is currently £40,000.  

Questions you have about optimising your pension contributions:

  • Do you have unused allowances from previous tax years which expires soon and may be utilised?
  • Have you reviewed your pension contributions?
  • Should you pay more into your pension?
  • Are you aware of the potential inheritance tax benefits of maximising your pension fund?

Once you earn more than £150,000, your annual allowance starts to fall, known as the ‘tapered annual allowance’. The tapered allowance applies if your ‘adjusted income’ is more than £150,000. Adjusted income is your total taxable income – so salary, dividends, rental income, savings interest, plus employer contributions. If your total adjusted income is between £150,000 and £210,000, you lose £1 of annual allowance (starting at £40,000) for every £2 of adjusted income. Once your income reaches £210,000, you’ll be left with an annual allowance of £10,000.

If your total pension savings exceed the lifetime allowance of £1.055 million in 2019/20, you may be liable to tax when you draw benefits.

Capital Gains Allowance

Everyone has a Capital Gains Tax allowance of £12,000 in this tax year. You can deliberately create a gain on an investment to use the allowance, so that when the investment is finally encashed you may not have any Capital Gains Tax to pay.

*utilising these allowances are provider timeline dependent.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

Tax Time with AWM: EIS

Tax Time with AWM: EIS

Tax-Year-End is approaching and its time to take full advantage of all those tax benefits, that not many people seem to know about.

This is Tip #2 of the blog series with the main topic of Pre-Tax-Year-End tax planning. If you missed Tip #1 on Venture Capital Trusts, head over to the AWM blog. 

These tips are to help make sure that you best utilise your Tax-Year-End options and today we focus on Enterprise Investment Schemes (EIS).

What is EIS?

Introduced in 1994, the Enterprise Investment Scheme (EIS) is a UK government scheme designed to encourage investment in small or medium sized companies. They do this by offering tax reliefs to individual investors who buy new shares in these smaller companies.

An individual can invest anything up to £1 million (or £2 million given at least £1 million is invested in Knowledge-intensive businesses) per tax year for tax relief.

To access an EIS an investor needs to invest in the shares of a small, unlisted company. Small means 250 employees or less, and maximum gross assets of £15 million (before the investment). Unlisted means that the company is not listed on a major stock market.

Investing in small companies is generally riskier than buying shares in large companies. However, small companies can grow very quickly.

The Different Types

  • There are two approaches an investor can access EIS investment:

    1. Direct/Single EIS Company
    An investor can invest directly in EIS qualifying companies and can choose which companies to invest in. These types of opportunities are more suitable for sophisticated investors who have good knowledge and expertise to assess and understand the companies they invest in.

    2.EIS Fund/Portfolio
    Most of the offers in the EIS space are in the form of an EIS fund or portfolio service provided by EIS investment managers who have the expertise to source and assess deals and build a portfolio of multiple EIS companies for clients on a discretionary basis. Through investing in an EIS fund or portfolio, you can benefit from the fund manager’s experience and expertise of deal picking and at the same time achieve a level of diversification within the portfolio.

AWM's Recommendations

AWM has a dedicated investment team researching investment offers in the whole of market. We have a rigorous selection process in place, aiming to find the best EIS offers in the market for our clients. If you would like to hear more about your options please contact us by clicking below.

Important Facts

It’s important to note that Enterprise Investment Schemes are not a viable option for everyone. We cannot guarantee the investment will take place to accommodate the 2019/2020 Tax-Year-End.

Ascot Wealth Management will only recommend individuals to invest in EIS qualifying companies after undertaking enhanced due diligence on the individual and ensuring they are suitable for the recommendation, this includes a High Net Worth Suitability Assessment. The general risks associated with EIS investment has been listed below which will apply for all EIS. There would also be deal-specific/sector-specific risks in EIS offers that need to be further considered at the specific EIS fund level or on a deal by deal basis.

Please click below to find out more about the potential risks of EIS or chat with one of our advisers to find out what the most viable option is for your personal situation.

*utilising these allowances are provider timeline dependent.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

Tax Time with AWM: VCT’s

Tax Tips with AWM - Tip #1 VCT's

Tax-Year-End is approaching and its time to take full advantage of all those tax benefits, that not many people seem to know about.

AWM will be running a series of blog posts on Pre-Tax-Year-End tax planning over the next week, so stay tuned. The aim of the blog series is to help make sure that you best utilise your options and today we focus on Venture Capital Trusts.

What is a Venture Capital Trust?

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 which are typically very small and are looking for further investment to help develop their business.

Tax Benefits

  • Income Tax Relief: Up to 30%
  • Tax-Free Dividends:  The dividends you receive from the VCTs you invested are tax-free.
  • Tax-Free Capital Growth: You won’t pay any Capital Gains Tax on profits from selling your VCT shares

The Different Types

VCTs commonly fall into three broad categories based on the profile of underlying companies a VCT invests in:

  • Generalist: Investments are usually made in unquoted companies across a wide range of sectors.
  • Specialist: Investments are made by a VCT fund manager specialising in a defined investment sector (e.g. healthcare, technology, environmental and media).
  • AIM: – The VCT makes investment mainly in companies whose shares are listed on the Alternative Investment Market.

AWM's Recommendations

AWM has a dedicated investment team researching investment offers in the whole of market. We have a rigorous selection process in place, aiming to find the best VCT offers in the market for our clients. If you would like to hear more about our panel then please contact us by clicking below.

VCT Versus EIS

  • VCTs normally have a lower minimum investment amount which usually ranges from £3,000 to £6,000 compared to EIS fund which usually starts with £10,000 or more.
  • VCTs’ are usually more diversified than an EIS fund. A VCT would normally have 30 to 80 underlying companies while an EIS fund may normally have 4 to 15 underlying companies.
  • VCTs can pay out dividends and are tax-free, providing you with a regular early realisation of the investment while EIS companies normally do not pay out dividends. If they do the dividend is not tax-free.

Important Facts

  • Its important to note that VCTs are not a viable option for everyone. VCT’s are not FSCS protected and investing in a VCT is dependent on market capacity and we cannot guarantee the investment will take place to accommodate for the 2019/2020 Tax-Year-End.

    Please click below to find out more about the potential risks of VCTs or chat with one of our advisers to find out what the most viable option is for your personal situation.

    *utilising these allowances are provider timeline dependent.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

AWM: Market Update

Tax Year- End Planning

We hope everyone is keeping well in these uncertain times.

With the speed of recent developments, we want to ensure communications are kept up this week. Many of you have been in touch with us during this period and hopefully, those calls have been useful.

Firstly I would just like to stress and credit just how well the whole Ascot Wealth Management team has handled the constantly evolving situation over the past few weeks. Especially with myself being the one self-isolating from last Sunday.

As we get deeper into this COVID-19 period it’s key we keep rationalising the situation. As per our note earlier in the week we have gone into remote working and are fully functional remotely. We sent out an updated contact list, please let us know if you have not received this.

The current levels of volatility are unprecedented, and we are at a stage of ‘fear’ in the attitudes of investors. Yesterday saw large moves in the dollar; partly due to business increasing their cash reserves to meet future liabilities, but just as in any point of market crisis the dollar is the preferred choice of many. We saw this in 2008. While it puts further strain on asset classes such as the £ it will be the cash that comes back into markets when a correction materialises.  The extent of the liquidity squeeze yesterday was deeper than I thought and whether this is short-lived or longer term will prove a pivotal point of this pullback.

Focusing on the UK, yesterday we saw the suspension of several UK property funds, which; on one hand, create flash negative headlines, however, on the other, it does protect long term investors in these funds with their physical assets. It does, however, mean we now don’t have the same ability to sell down these particular funds and return investors capital. We will keep you posted on the replacement allocation for any new contributions into the portfolios. I know the investment team have prepared a separate note on this so I will allow that to further explain the implications.

Oil adds further challenges to the market, with continued actions of increasing supply (from the Saudi’s) in a time of lack of demand, this has meant we have seen prices drop to mid-1980’s levels of $25 on Brent Crude and Sub $20 briefly today on US Crude. This will have long-lasting impacts on oil business and the worrying start of downgrades of oil firms to ‘junk’ status today has given all credit markets a violent shock.

See a picture (below) of the oil forward curve which has a short-term pricing to current levels but not a flattening by any means. In Cape Berkshire, we added a small position on Monday and despite further drops yesterday we will, as with all asset classes, keep an eye on this for the opportunity to add if we see fit. We have a call with an excellent natural resources fund manager today, so will inform you further after that, if necessary. Ideally, we would have waited 2 more days to invest, but we simply are not trying to call a bottom to something with truly record-breaking levels of volatility.

So, that’s three pieces of negative press, but I feel two of these will be challenged in the coming weeks by investors who see a buy opportunity. Every day there are more promises of fiscal stimulus from Governments and Central Banks, despite the Fed cut on Sunday being seen by many as ‘throwing all their monetary tools at the issue’, I personally think it showed the lengths they are willing to go in order to support the economy. This has been followed by a more unified ECB package that will again be huge in size at some €50 billion in support. This will be a liquidity tool that will buy all Government, including Greek, debt as well as buying corporate bonds. This is something not even the US has decided to do yet. Governments know, that to avoid a long deep recession, these are the steps they must take.
 
Global reports on the COVID-19 show China suggesting that new domestic cases are flatlining, with two consecutive days of no domestic cases, which is positive for China, but it foreshadows some of the lengths we are potentially going to have to go through in the UK to mitigate the spread. South Korea also seems to have their spread now under control and the US seem to be leading the race for some form of a vaccine. Although, perhaps Mr Trump went too far with the mention of a Malaria related vaccine being effective ahead of the health departments approval!
 
Our advice to clients during this time is to keep in contact with your advisers and the investment management team, we will continue to send out regular updates. The decision of whether to increase or decrease risk by moving up or down a portfolio has really been driven at an individual level. If you wish to take an increased cash position for a short period we see this as a better option to large liquidation.
 
Now is the time to look at reducing unnecessary expenditure in order to avoid depleting assets at an already depressed level. Perhaps more easily done with more and more borders closing restricting travel and holidays planned, but other projects, like extensions, can be deferred in order to mitigate drawing down on an asset and realising a loss.
 
As touched on in my last note, we would stress again the efficiencies in our investment process in the Cape Berkshire Discretionary proposition – If you require more information on our discretionary proposition, please contact your adviser.
 
We do currently have some cash in the Cape Berkshire portfolios and we will look to get this invested on days I feel are most stretched. We do this knowing it could well drop lower the next day but with the volatile 10 days we have had with the stock market, circuit breakers on 5 of those in a row, shows an exact entry point is impossible to predict. We are increasing our planned fund manager meetings for the next 3 weeks, all by video/telephone, and these will pivot where we focus on any changes.
 
On the subject of the forced working practices, I believe this will be looked back upon as a turning point in the full adoption of technology within many industries. I also think it will show that business can operate more efficiently by adopting these practices and as such a lean model will evolve. At AWM we were well on the way to implementing this but for this to be more widely adopted will aid the next stage of the economic cycle. As with the 2008 crash, we had the Amazons and Apples go on to dominate US market share and if we can remain, long term investors, I truly believe we will again look back at this as a major pullback but one I am confident we will get through economically, returning to and superseding previous portfolio levels.
 
As ever, please get in contact if you wish to discuss anything further.
 
We wish all our clients and families the best during this time.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used.