How to avoid the 50 per cent rate
Thursday 11 March 2010
I was interested in the FT article on how to avoid the onset of 50% from next April for incomes over £150,000.
At first read, much of the ideas can be applicable but what is clear there is no magic bullet. It is the same old ideas. Pay into a pension… invest into an ISA, consider VCTs and offshore bonds. The latter two have issues that many investors fail to recognise but that's a story for another day. The best answer was leave the country. Now that will save tax…depending on where you go!
Then I got to thinking. The answer is a more strategy decision by looking how various solutions, with their respective advantages and disadvantages; how they compliment each other…and then measure the relative tax benefits. This is when it gets interesting. Take the VCT for example. The article says don’t let the tax tail wag the investment dog. But that’s exactly what VCTs do. An investor with say 30% tax saving will think that 2%, 3% or 4% charges each and every year matters little when compared to the 30% tax saving. Yet it is the charges that are the problem, not the tax.
When a VCT is sold the risks and explicit charges will be disclosed for regulatory purposes but the emphasis is on the tax saving... not on the charges.
The focus of the VCT provider is to sell the product. The client wants the tax saving but in truth the answer is how to optimise your wealth rather than minimise on your tax; it may sound the same but the perspective is entirely different.
It is that perspective that means you, as the investor, end up being a winner. In too many cases investors buy what they think are tax efficient schemes and sacrifice personal optimisation of their wealth.
Just because you may do exercise all week, and eat the right calories with a balanced nutrition intake, does not mean your overall health and fitness will change. It needs long term changes. The same is true for your personal wealth. We are in financial terms your long term personal fitness trainer and health nutritionist.
posted by Murray Round Wealth Management @ 09:49,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
Welcome to our Blog
Our Blog focuses on the three Ts...truth, transparency and trust. The world of investment management is fraught with self interested parties keen to sell investment products but wrapped up as 'advice'. Only with totally transparency, can investors make informed and successful decisions. We have included various categories for simpler navigation, alternatively search our Blog using key words you think are relevant. We hope you find something of interest to you.
Contact Us
We welcome your enquiry to us. Simply click on Contact Us' link at the top of the page. You may also email us at service@murrayround.co.uk or telephone 01743 248108.
Visit us again!
