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Boost Your Portfolio Income With Tax-Efficient Investing

The goal of any investment strategy is to produce cash flow, whether in stocks, bonds, real estate, precious metals, real estate, a small business, or some combination of these. If you invest wisely, your savings may even grow in value at a faster rate than inflation.

Many people may wonder if now is a good time to invest, given that the global economy is still healing in the post-pandemic period.

The UK market currently benefits from a healthy dividend income stream. Today, the economic outlook of the UK is stable and conducive to growth, trade, and investment.

Moreover, the UK boasts a well-developed, high-spending consumer market and a liberal, business-friendly regulatory framework.

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But before all else, the investor should also be aware that taxation is due on all investment income just as on other forms of income. It’s important to be aware of the several types of taxation, such as Income Tax, Capital Gains Tax, and Stamp Duty Reserve Tax, that may apply to the money you earn from your investments.

If you’re having trouble following along, consulting an expert can be helpful. If you need help with your investment tax returns, Pearl Lemon Accountants is the place to go. 

Find out more and get in touch with us right now.

How Can I Do Tax Efficient Investing?

The impact of taxes on your investment returns can alter your standard of living. The primary goal of your investments. Whether it be long-term savings or current income—will determine the type of investment you should choose.

Regardless of your investment type, you can take advantage of three primary ways to offer tax savings.

Individual Savings Accounts (ISAs)

Individual Savings Accounts (ISAs) are tax-advantaged savings and investment accounts that allow you to make the most of your yearly ISA allowance by protecting it from income, dividend, and capital gains tax.

The ISA contribution limit for the 2022–2023 tax year is £20,000. You can access your money in an Individual Savings Account (ISA) whenever possible without incurring any tax charges.

For the 2019–20 tax year alone, more than 13 million people have subscribed to an ISA, and nearly 40% of Britons have an ISA of some type.

The ISA was created in 1999 to promote saving and investment with tax relief. Since its introduction, the ISA has expanded to include various products, the most prominent of which are the Cash ISA, Stocks and Shares ISA, Innovative Finance ISA (IFISA), and Lifetime ISA.

Each ISA product comes with its own set of benefits and potential disadvantages. The possibility of invested or saved funds to increase without being subject to income or capital gains tax is a feature shared by all ISAs.

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Pensions

The government will grant you tax relief if you have contributed to a pension plan to save for retirement.

Your pension plan, like an ISA, can grow tax-free. Once money has been contributed to a pension plan, it can be invested in tax-free assets that yield income or capital growth.

The cost of a £100 contribution for a basic-rate taxpayer is £80, and for an additional rate taxpayer, it is £55. This is based on the tax relief provided by all pension schemes in the UK. 

Venture Capital Trust

Individuals can benefit from tax relief provided by venture capital schemes if they participate in businesses and social enterprises not listed on the stock exchange. These schemes include:

  • Enterprise Investment Scheme (EIS)

To help startups get off the ground, the government introduced the Enterprise Investment Scheme (EIS), which provides investors with tax relief in exchange for backing promising businesses at an early stage.

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  • Seed Enterprise Investment Scheme (SEIS)

As the EIS’s younger sibling, the SEIS was introduced in 2012 to serve the earliest-stage businesses seeking investment

Since its introduction, the Seed Enterprise Investment Scheme (SEIS) has encouraged investors to put over £1.4 billion into over 13,000 startups by offering them tax breaks and other benefits.

  • Social Investment Tax Relief (SITR)

Initially introduced in 2014 and later expanded in 2017, Social Investment Tax Relief (SITR) provides investors with tax relief in exchange for supporting the expansion of social enterprises. A taxpayer can receive a 30% tax credit for supporting a social enterprise through a SITR-qualified share subscription or loan.

If you match the criteria for investors, you may use a venture capital program to make a direct investment in a qualifying company. In addition, the business or organisation must qualify under the terms of the scheme.

When and How to Claim VCT Tax Relief

You can get the income tax relief when you file your Self Assessment tax return for the year the shares were issued. If you qualify for a tax refund, you will receive it immediately upon filing your return. You can enjoy the tax relief by making the necessary adjustments to your tax status or filing for a refund by contacting HMRC.

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When should you consider a VCT investment?

As an investment vehicle, a VCT appeals to many people because of its attractive return potential and tax advantages.

To determine whether a VCT is a good investment for you, it is advisable to consult a financial advisor before making any commitments.

You can map out your financial goals with the help of Pearl Lemon Accountants. Our services include helping clients with various financial matters, including investments, taxes, insurance, and retirement planning.

Book a call with us.

Other Services We Provide

The following are some of the financial planning services offered by Pearl Lemon Accountants.

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Personal Tax Services

We help people and businesses manage their tax obligations. Our tax compliance services ensure that our clients make their tax payments on time and in full accordance with HRMC’s regulations.

HMRC Tax Investigations Advice

We at Pearl Lemon Accountants know how frustrating tax audits and inquiries can be. Our tax experts are always on top of things regarding tax law, compliance requirements, and HMRC processes, as well as the strategy needed to address HMRC audits.

Corporate Tax Services

Our corporate tax specialists at Pearl Lemon Accounting are skilled at tailoring our services to the specific requirements of businesses of any size and industry. We’ll ensure you have a solid plan for the future, make the most of any tax relief, stay in compliance with the law, and minimise your tax liability.

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VAT Accounting Services

Value-added tax (VAT) is a complex and time-consuming area of accounting that many business owners find overwhelming at times. For your convenience, we can handle all of the required accounting tasks and see that they are carried out accurately.

Payroll Services

Due to the ever-changing nature of payroll laws and regulations, your business must have access to knowledgeable, all-encompassing back office payroll support. Accurate payroll processing and management, up-to-date payment reporting and analysis, and more are some of our services.

For reliable accounting services, London companies can rely on Pearl Lemon Accountants. Because we value the faith you place in us, we work hard to satisfy your needs in every way.

Get in touch with us.

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Be Wise And Use Your Taxes Efficiently

The way you structure your business and personal affairs will have a significant impact on your tax liability. To make sure you pay the least amount of tax, we’ll devise the best planning strategy.

Ensure that your company and yourself are compliant while saving money on UK taxes by partnering with some of the best tax experts. 

Pearl Lemon Accountants has your back. So why don’t you lean in for a good chat?

Find out how we can help you save money on taxes right HERE.

FAQs

State and local income taxes cannot be levied on interest earned on Treasury bonds or Series I bonds, making them an attractive investment opportunity. 

You can invest without paying capital gains tax on shares if you keep all of your money in either an Individual Savings Account (ISA) or a Self-Invested Personal Pension (SIPP).

If you fail to file your taxes or make a required payment, you could face a hefty penalty and pay more than you originally owed because of interest.

Here at Pearl Lemon Accountants, we offer the services that best suit gamblers such as yourself.

So what are you waiting for? Book a call now.