Tax implications on your investments
When looking at different types of investment, you also have to consider the tax implications. In fact, you could be entitled to allowances totalling over £30,000*. When deciding on the investment vehicles for your funds, it’s important to take these allowances into consideration.
So what are the main allowances?
Personal allowance
Firstly, we all have a personal allowance that we can offset against income, although this is reduced if you earn more than a certain level, and could even be reduced to zero. Even children have personal allowances, and it’s important to make full use of them.
Capital Gains allowance
We also have a tax-free Capital Gains allowance* of just over £11,000. If you aren’t using this – and you don’t have any personal allowance left – it could be very attractive to offset this against your investments.
Dividend allowance
There is now a £5,000 allowance* that you can offset against dividends. This can be attractive when looking for an investment to help top up your income.
Saving tax on interest
Most people earning less than £16,500 will not have to pay any tax on their saving interest, because they can use a £5,000* saving tax allowance which reduces by £1 for every pound of income earned above the personal allowance.
On top of this, every basic rate taxpayer can receive £1,000* interest on their savings without having to pay tax on it. A higher rate tax payer can receive £500* tax-free.
What to do
At Monetary Solutions Ltd, you can book a free initial consultation about any financial matters, so please call us on 020 8655 8488.
When you are looking at tax implications, we recommend you also seek advice from an accountant.
Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action