Tax efficient investments

National Savings & Investments products

There are various tax efficient investments available from National Savings & Investments (NS&I), including:

  1. premium bonds

  2. income bonds

  3. savings accounts

  4. investment accounts

  5. guaranteed growth bonds

  6. individual savings accounts (ISAs)

NS&I also has some products that were formerly on general sale but are now closed to new investors:

  1. national savings certificates

  2. children’s bonds

As NS&I is backed 100% by the Treasury, these products are a very secure investment. Some individuals may favour an investment with NS&I over similar offerings from the high street banks.

For further information about NS&I products, see Practice Note: National Savings & Investments products.

Individual Savings Accounts (ISAs)

ISAs are tax-free funds in which UK residents can hold a range of different investments. Originally, these were cash or stocks and shares products held by those over 16 years of age, but in November 2011 the junior ISA was launched which allows tax-free cash accounts to be set up for the benefit of those under 16. Innovative finance ISAs were introduced with effect from 6 April 2016.

The main benefits of ISAs

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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