An extra £250,000 ISA allowance?

April heralds a number of major changes to tax and pension rules (as outlined in previous editions of this newsletter).

 

One, that has so far avoided most of the headlines, is the change to the taxation of dividends and the introduction of a new dividend allowance. From April, everyone will be able to receive £5,000 of dividends without incurring any extra income tax.

 

In the right circumstances, and with careful portfolio construction, it could be possible to shelter up to about £250,000 immediately without paying any tax at all (income tax or capital gains tax). This portfolio would effectively be as tax-efficient as an ISA from day one.

 

The challenge is to ensure that the correct investments are sheltered in the correct tax wrappers. We are in the process of developing the tools to be able to deliver this seamlessly to our clients, something we hope to roll out in the next few months. We are calling this “Tax Optimisation 2.0”.

 

We have calculated that, if done correctly, this could save our clients more than £1,000 a year in unnecessary tax.

 

If you would like to discuss how, please get in touch. We will be contacting existing clients over the next few months to discuss how this strategy might be implemented.