In this half of Jack Rose’s’Tax-efficient investing calendar’, Rose runs through the first and second quarters, highlighting what advisers should do when and how best to avoid the end of tax-year rush.

Advisers often ask us what they should be thinking about at different times of the year when it comes to investing in Enterprise Investment Scheme (EIS), venture capital trust (VCT) and inheritance tax (IHT) products.

We have therefore come up with a ‘tax-efficient investing calendar’, as a guide to what advisers should look at – and when they should look at it, to steer clear of the inevitable rush of activity that usually comes in the first few months of the year as 5 April and the end of the current tax-year approaches.

Q1 (January – March)
EIS: With the tax year-end fast approaching, the crucial thing to check with EIS providers is their time frames for deploying investors’ money into the underlying investments. This is especially relevant for anyone looking for carry-back to the previous tax year.

Monies will need to be invested into the underlying EIS-qualifying investments before 5 April for anyone needing carry back to the previous tax year. This often means evergreen growth capital providers will be unable to help as they often need six to 12 months to fully invest a client’s monies.

As a result demand increases over this time for many of the structured EIS products and advisers need to move quickly to ensure they do not miss out – a number of the media focused products have become very popular over the last couple of years.

VCT: As we progress through Q1, the best and strongest offers within the VCT market will be closed or closing.

IHT: The run-up to 5 April is always a good time to review ISA portfolios and make sure clients have used their full allowance. As a result, it is also a good time for AIM IHT ISAs – whether that involves transferring an existing ISA portfolio into an AIM IHT service and/or using the current tax-year allowance within an AIM IHT portfolio service.

Q2 (April – June)
EIS: The start of the tax year is always a good time to look at evergreen growth capital EIS funds. The fund managers will have the time to deploy the money without the pressure of tax-year end. It also means investors have a good chance of having their EIS 3 certificates back before the self-assessment deadline on 31 January the following year.

VCT: The majority of VCTs will be closed. The main thing to remember is to collect or keep a record of client’s shares and tax certificates, which can often be sent directly to the client. These are either used to adjust an investor’s tax code, or submitted with their self-assessment. It could also potentially be worth considering transferring any VCT shares into a nominee account to house all your client’s investments under one roof and make it easier to keep track of everything.

IHT: Investing in business relief for IHT is less driven by tax year-end than EIS or VCT as it is not tax-year dependent. As clients will have no doubt looked at their ISA subscription for the past tax year, however, it is worth potentially considering the new tax year’s subscription at the same time and also perhaps switching an existing ISA portfolio into an AIM IHT ISA service.

General: It is always a good time to look for educational seminars run by managers and industry bodies following the end of the previous tax year. These will provider a refresher on product benefits and specific legislation, highlight rule changes and provide modelling and opportunities to engage with clients – hot topics this tax year include residency nil rate band, buy-to-let mortgage changes, VCTs and pensions.

Jack Rose is head of the tax-efficient division at LGBR Capital.

Source: ProfessionalAdviser, Jack Rose: Tax-efficient investing calendar – Q1 and Q2.



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