Shelter up to £1m from the taxman

13 january 2013

 

You could turn a pot of a little more than £700,000 into nearly £1m by “stacking” the tax reliefs available on a variety of investment vehicles, such as venture capital trusts (VCTs), enterprise investment schemes (EISs) and pensions. However, to take full advantage, you need to do so before the end of the tax year on April 5.

Ted Mott of Oxford Capital, the EIS firm, said investing the full amount into each of these would produce a total pot of £995,200 and tax relief of £287,500, meaning an outlay of only £707,700.

The tax relief you receive is made up as follows. By investing the maximum allowed in EISs — £500,000 — you will receive back 20% tax relief of £100,000. The maximum into VCTs (£200,000) gives 30% tax relief of £60,000, and the maximum into pensions (£255,000 this year) gives 50% tax relief of £127,500.