The new year offers the perfect chance to take stock of current investments and new opportunities.
The economy has changed a lot over the last 12 months; with inflation and interest rates at their highest for many years, a lot of investors are facing market conditions they haven’t experienced before. It’s more important than ever to make sure your money is working as hard as it can – this means making investments as tax efficient as possible.
There are some simple, effective, and legitimate ways to protect your investment returns from excess tax. The first step is having a plan, being clear in your investment objectives and understanding your options across two key areas: ISAs and pensions.
Making the most of your ISA allowance is crucial to growing your wealth; the ISA allowance is a generous tax break offered by the UK government. If you’re 18 or older and a UK resident, you can pay up to £20,000 a year into an ISA, including the
Innovative Finance ISA that we offer. By using an IFISA, your investment is protected from UK income and capital gains tax meaning the returns you make won’t be taxed. It is worth looking around for the best ISA rates: our mezzanine and bridge projects are typically ISA eligible, offering tax-free returns of up to 15% per annum.
Using an ISA to invest will be even more appealing from April 2023, as the UK government decreases the annual capital gains tax (CGT) exemption from £12,300 to £6,000 (dropping again to £3,000 from April 2024).
Alongside ISAs, taking control of your pension is a great way to maximise tax efficiency and accumulate a lump sum for retirement. A SIPP (Self-Invested Personal Pension) or SSAS (Small Self-Administered Schemes) offer tax benefits that potentially increase the amount you’ll have when it comes to draw retirement income. If you’re interested in investing with Shojin through a pension product (or through an IFISA), please register through our website or
schedule some time with our investor team.