Investments

From their introduction on the 6th of April 1999 the tax efficient replacement for personal equity plans and tax exempt special savings accounts were introduced as an efficient way to save money for the future. ISA's or individual savings accounts were designed to provide a haven free of tax for deposit based accounts, collective investments and originally single company shares.

Individual saving accounts have come of age in the last decade giving you a tax free allowance of up to £20,000 per person each year. You also have the opportunity as  part of that to invest in a Lifetime ISA or LISA since 2016. For every £4000 invested in the tax year the government will top up by £1000. However there are strict rules for withdrawal so advice is key in this area. Junior ISA’s were introduced in 2011 with an annual tax savings of £9,000 per annum per junior.

As with all tax planning the old adage of use it or lose it applies to your ISA allowances. Once the 5th of April passes any unused allowance cannot be reclaimed resulting in possible unnecessary income tax and capital gains tax levies.

Making use of your ISA allowance forms one of the principal objectives of any financial plan. At Romilly Financial we will ensure you make the most of your tax allowance whilst understanding your risk appetite and savings goal. Contact us for further information.

One of the key methods of mitigating risk is to diversify your investment. One way of achieving this is to invest into a ‘collective’. A collective is, as it sounds, a pool of investors whose money is placed with an investment or fund manager. The manager’s job is to use that money to buy stock across a diversified range within his or her mandate. Collectives can be can be funds or trusts an can have a wide range of variations. They can be sometimes known as fund of funds or manager of manager, or just simply managed funds. Generally collectives make use of a professional investment manager and benefit from the economy of scale that a pooled fund can demand. 

These collectives can be geographically specific, company specific (EG technology, industry) or simply managed funds investing in a wide range of sectors. Collectives or investment funds as they are also commonly known provide the back bone to the investment and saving universe, attracting investment from pension funds, ISA funds, Government gilts and of course fixed interest.

Choosing the right funds to make up an investment or savings portfolio is key to minimising your risk and maximising your growth. Making use of modern technology and portfolio theory Romilly Financial is able to tailor a suitable investment plan for you.

An investment or insurance bond is a single premium life assurance policy. These can often be confused with fixed term bonds on offer from your local bank or building society. Although they both represent an investment of a single premium or lump sum they are very different contracts.

Traditionally insurance bonds carried the promise of an annual bonus and were known as with profit policies. More recently these are unit linked bonds or investment linked bonds offering a wide range of risk and return funds. Along with the investment they carry a very small life assurance element giving them a different taxable position, exemption under CRAG (Charging for Residential Guide) or Care Act rules and allowing them to be invested efficiently into trusts.

Understanding the difference between the two styles of bonds requires careful explanation before deciding on what's right for you. The team of financial planners at Romilly Financial are well placed to provide you with all the advice you need in understanding these products.

An Exchange Traded Fund or ETF as it is known is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold. They are considered to be a higher risk investment made up of assets such as stocks, commodities and bonds. Although commonly ignored they can be suitable as part of a portfolio given their relatively low costs. At Romilly we will help you find a suitable ETF choice via our discretionary partners. 

As a financial planning practice, we provide investment solutions and strategy planning. Although many of our investments may contain shares we do not offer any form of share dealing service. We do however through our professional connections, have access to stock broking services and would be pleased to make the introduction upon your request. 

A little known fact that came to light some years ago, is that if you had made full use of your PEP, TESSA and ISA allowances you would today be sitting on more than a million pounds in savings. Taking advantage of your full tax allowance for your savings is not always achievable, however starting with a small monthly contribution into a savings plan or ISA never fails to bring a little financial comfort in the years to come. As part of our annual reviews, we discuss your savings capacity and recommend a suitable product for you. 

This type of scheme is a highly tax efficient form of investment and is designed to help smaller companies raise finance through a range of tax efficient strategies. It is often considered a high risk investment solution and should be used carefully in conjunction with tax planning and portfolio building.

Investment into an EIS provides immediate income tax relief and has the ability to extinguish a capital gains tax bill.

It is important to know that there are a number of qualifying rules and regulations for this type of investment and it is commonly thought as a complicated tax planning vehicle, not for the faint hearted.

Should you wish to discuss any EIS requirements please do not hesitate to contact us. 

VCT's or Venture Capital Trusts are a highly tax efficient closed end collective investment scheme aimed at providing funding for small companies hoping to expand.

They are listed on the London Stock Exchange (LSE) and were introduced in 1995 to encourage investment into UK start ups. They provide immediate tax relief and a capital gains tax deferral.

These smaller companies have been described as the 'lifeblood of the UK economy', which is why the UK government offers serious tax incentives aimed at attracting investors. These incentives include:

• Up to 30% income tax relief on the amount subscribed*
• Tax-free dividends
• Tax-free capital gains on the disposal of shares

Smaller companies do carry an element of risk, which is why it is important for us to find you a VCT  and manager with skill and expertise in this highly specialised area.

Like EIS’s they are subject to complex rules and regulations which would need to be fully explained and understood before entering into this type of arrangement.

At Romilly we would be happy to advise you of the benefits and risks associated with this type of investment.