Tax Efficient Structures for Investment ; Today's Investor Is Faced with a Bewildering Array of Options, yet Once He has Navigated a Path Through the Risk Minefield That the Choice of Funds and Asset Classes Represent, He Is Not at the End of the Process. Eric Williams, Birmingham-Based National Head of Private Client at Grant Thornton, Outlines How Different Forms of Taxation Should Influence Decision Making.

Summary

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Income Tax or Capital Gains Tax? The disparity in tax rates between Capital Gains Tax (CGT) and Income Tax is something that can be exploited by the canny investor.

At the wealthier end of the scale, tax-x able income over pounds 150,000 p.a. is taxed at 50 per cent, and between pounds 37,400 and pounds 150,000 at 40 per cent, whereas capital gains are completely exempt from tax up to pounds 10,100, with returns over that threshold being taxed at a maximum rate of 28 per cent. Where taxable gains and income do not, together, exceed pounds 37,400 for the current year, the rate of CGT is only 18 per cent. Therefore, it pays to seriously consider a tax structure where the return is subject to CGT and not income tax.

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Tax Efficient Structures for Investment ; Today's Investor Is Faced with a Bewildering Array of Options, yet Once He has Navigated a Path Through the Risk Minefield That the Choice of Funds and Asset Classes Represent, He Is Not at the End of the Process. Eric Williams, Birmingham-Based National Head of Private Client at Grant Thornton, Outlines How Different Forms of Taxation Should Influence Decision Making.

The annual CGT exemption of pounds 10,100 will also be attractive to those with more modest incomes and investments, especially as investments can be shared between spouses, so doubling up on the exemption.

Exempt Structures So much for the theory: what about the practice? Well, before even considering paying tax...

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