At GBI Magazine, we once again aimed to determine the industry’s thoughts on range of topics that are widely being discussed within the tax-efficient investment space.
Our last series focused on the recent election and autumn budget as they dominated the industry. This week, we focus on how these events will further impact the tax-efficient investment space. We aimed to gain further insight into investors and clients views on strategies, the biggest challenges, and interest when it comes to investing in tax-efficient investment options.
Industry experts and professionals have shared their views on the factors mentioned.
1) Which tax-efficient investment strategy do you find most valuable for clients?
With a broad selection of appealing investment strategies on offer to clients, it can be somewhat difficult to select the correct option that will benefit interests and supply the biggest potential growth and reward. When determining to locate which investment strategy is perceived as the most valuable for clients, we asked industry professionals whether they believe that ISA’s (Individual Savings Accounts), SIPP’s (Self-Invested PersonalPensions), VTS’s (Venture Capital Trusts), EIS (Enterprise Investment Scheme’s) are the most valuable.
80% of participants stated that currently, Enterprise investment schemes are looking the most beneficial for clients investments due to a number of standout benefits. EIS investments provide an eye catching range of investment benefits such as a 30% income tax relief, tax-free growth and large potential for IHT relief which is of course a defining factor for clients.
Participants also stated that VCT’s are looking to provide impressive value for clients investments now, offering advantages up to 30% upfront IHT relief, a generous allowance of having the choice to invest up to 200,000 per tax year, along with tax free dividends.
2) What is the biggest challenge when advising clients on tax-efficient investments?
With pressure to provide the best possible options for clients investments, advisors have to factor in the extensive challenges that can come along and affect operations. 70% of participants said that balancing risk and return in tax advantaged schemes was a major challenge, with a similar percentage of 60% advising that staying up to date with tax regulation challenges is another key obstacle. Due to the autumn budget once again coming into play and affecting tax regulation, alterations were made to capital gains tax which has seen an increase this year. It is currently unknown whether more tax changes will be implemented in the near future, but it is certainly something that advisors will be keeping a close eye on to ensure that clients receive the best possible outcome.
3) How do you anticipate clients’ interest in tax-efficient investments will change in the next 12 months?
Lastly, 60% of those surveyed said they expect to see a slight increase in interest. This outlook could be due to the heightened focus on ISA’s and discussions surrounding pension investments. The remaining 40% state that they perceive interest in tax-efficient investments to remain steady.
We would like to hugely thank all our industry professionals who took the time to take part in our latest poll. Be sure to keep an eye out for more opportunities to share your views!
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