Not making use of Capital Gains Allowance - Suggestions

darren72

I'm not currently making use of the capital gains allowance each year, but I am an additional rate tax payer.

Are there any fairly low risk investments that I could invest in where the increase in capital could come out of my allowance (rather than an investment where I have to pay income tax) ?

Hopefully this makes sense ?

Thanks

jem16

darren72 wrote: »

I'm not currently making use of the capital gains allowance each year, but I am an additional rate tax payer.

Are there any fairly low risk investments that I could invest in where the increase in capital could come out of my allowance (rather than an investment where I have to pay income tax) ?

Hopefully this makes sense ?

Thanks

If you were investing it would make sense to use your S&S ISA allowance. That way you would avoid extra income tax on dividend payments and CGT.

darren72

Thanks - Already making use of my S&S ISA at the moment - so looking for other ideas.

I see most (if not all) structured products are capital gains taxable (so that is another option) - Unfortunately there are none as good as the Premier Asset Management one (PLE37) that I took out a few years back that returns almost 100% in addition to my capital.

Thanks

cepheus

I think zero dividend preference shares used to be used for this sort of thing, but they went out of favour after being marketed as low risk but were in fact more highly geared due to investing in one another! They still exist
http://citywire.co.uk/money/noughty-noughty-the-zero-dividend-preference-shares-table/a716907

...some share classes have no income associated with them, so there's no income tax to pay. They can also be useful if you have unused capital gains tax allowances or capital losses - See more at: http://www.theaic.co.uk/guide-to-investment-companies/split-capital-investment-companies#sthash.o8xulkjj.dpuf

kidmugsy

darren72 wrote: »

Are there any fairly low risk investments that I could invest in where the increase in capital could come out of my allowance (rather than an investment where I have to pay income tax) ?

If you insist on low risk, then ZDPs (as cepheus says) may be the answer.

darren72

I'm happy with higher risk if this gives additional options.

I do have some high risk investments already, in addition to many low risk and cash.

cepheus

darren72 wrote: »

I'm happy with higher risk if this gives additional options.

I do have some high risk investments already, in addition to many low risk and cash.

These trusts sometimes split off a high risk part.

Capital shares

Capital shares are one of the highest risk types of share, providing the possibility of a high level of capital gains but no income during their life. They entitle shareholders to all leftover assets on wind up of the company, after every other share type has been paid off – they’re the lowest priority. If the company does well, capital shareholders can do very well indeed, but if it does badly, and barely has enough to pay what it owes the other types of shareholder, they get nothing at all. You are liable to capital gains tax on the capital growth from capital shares. They don’t give an income, so there’s no income tax to pay. - See more at: http://www.theaic.co.uk/guide-to-investment-companies/split-capital-investment-companies#sthash.0GJpGQkU.dpuf

bigadaj

darren72 wrote: »

I'm happy with higher risk if this gives additional options.

I do have some high risk investments already, in addition to many low risk and cash.

High risk options might include vct or eis, seis.

These are very high risk and only suitable for a small portion of a portfolio for someone with a high appetitie for risk. Do your own research and they are akin to private equity but many people have done well with these over the last few years, particularly with smLl companies outperforming, and the tax relief can help mitigate losses if the market turns in this sector.

gmgmgm

Look at "accumulation" funds- these pay no income, but (hopefully) appreciate in value. So ultimately, liable for CGT.

For example, I'm considering switching from IWRD to SWDA (the accumulation version of the iShares ETF).

gadgetmind

Um, that's not how accumulation funds work from a tax POV.

http://monevator.com/income-tax-on-accumulation-unit/

You're much better off with your income ETF as it will make declaring the income and working out your gains much easier.

bigadaj

gmgmgm wrote: »

Look at "accumulation" funds- these pay no income, but (hopefully) appreciate in value. So ultimately, liable for CGT.

For example, I'm considering switching from IWRD to SWDA (the accumulation version of the iShares ETF).

As gadget says you may be under a misapprehension and if a higher rate taxpayer or above then might owe the taxman a few quid.