13 February 2014

If You Should Die Without a Will...

I came across this little ditty recently. It's not Keats but the sentiment is good enough.

If you should die without a will
Whose pockets will your money fill?
The ones you truly want to have it
Or someone else who'll gladly grab it?
Consider these important "ifs"
Alas, ignored by countless stiffs.

If you're intestate it's decreed
A "special grant" is what  you need
This means not you, but legislation
(called Letters of Administration)
Decides who gets you garden gnomes
Your spouse? Your kids? Consult the tomes!

If you've no spouse nor next of kin
"Bona Vacantia" may come in
In other words your precious pounds
Are simply give to the Crown
Or to a Duchy, or if not
The Duke of Cornwall cops the lot.

If you're insane and if you find
"A sound and a disposing mind"
Are not among your personal traits
You'll have to stay an intestate
But if you're sane, for a small bill
Have peace of mind and MAKE A WILL!

4 February 2014

Tax-Efficient Investing - VCTs and EISs

Apart from investment performance and charges, the other main factor when considering how to invest some hard-earned money is tax. Obvious starting points are the annual ISA allowance, and the tax relief you receive on pension contributions. But both of these have their limits.

For larger sums (and for other reasons), Venture Capital Trusts (VCT) or the Enterprise Investment Scheme (EIS) may be appropriate. Although often considered together, and both created by the government to encourage investment in small companies, they are actually rather different beasts. But without going into too much detail here's some highlights.

Both provide Income Tax relief of 30% - that means getting back Income Tax you have paid up to 30% of the value of your investment. Regardless of investment performance this is often a reason for VCT or EIS investment on its own. You do have to hold the investment for a while, though - 3 years for EIS, 5 years for VCT. The latter also provides tax-free dividend payments.

With an EIS investment there is also potential to defer Capital Gains Tax - business owners selling a company can take advantage here. And your Inheritance Tax situation may also be improved with an EIS investment after two years using "Business Property Relief".

All in all, these types of product are worth considering, particularly if you have a tax issue which can be addressed. However, ultimately you have to remember that you are investing in small companies which are inherently less stable than larger ones. Professional advice is certainly recommended.

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