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The past few years have not been kind to those looking to invest tax efficiently. Allowances governing what can be saved tax-free into a pension have been cut back, and strict new rules have restricted the availability of venture capital trusts and enterprise investment schemes.
But investors and savers have another key tax planning tool — the Individual Savings Account (Isa). The annual allowance has been steadily ticking up to its current level of £15,240 and from April 6 leaps up again to £20,000.
As with pensions, investments held within an Isa do not incur capital gains tax when sold, and no further tax is payable on any income or interest they yield. This means investments held within an Isa wrapper can grow more than those held outside. But investors need to pick the right investments — and the right Isa. Come the new tax year, there will be no less than six types of these.
This week’s edition of the Investors Chronicle is a comprehensive guide to help you construct the best strategy for your Isa and choose investments most likely to help you hit your saving goals.
We have rounded up 20 expert suggestions on funds and investment trusts for investors looking for growth, income, wealth preservation, diversification and contrarian punts. These range from reliable stalwarts such as Scottish Mortgage Investment Trust and Liontrust Special Situations, to more exotic options such as Smith & Williamson Global Gold & Resources and Standard Life Private Equity Trust.
Passive funds, meanwhile, enable you both to have broad exposure to a wide range of asset classes and take more of a more tactical approach via exchange traded funds at a lower cost than active funds. So we have highlighted 10 passive funds to consider for your Isa in areas such as growth, income, bonds, commodities and smart-beta.
Heightened valuations among UK equities are a risk for investors. The IC has highlighted 10 “good value” shares which have reliable market positions and income advantages, or offer consistent performance.
Picking the right investments is not the only issue. Savvy investors will enjoy reading our tips on Isa investment strategies, plus our guide to the different types of Isas, and how you should use them for your financial planning.
Tax-efficient investments will boost your returns, but charges from platform providers can erode them — especially over long time periods. So check out the IC cost comparison of different Isa providers and see how much you could save.
Leonora Walters is personal finance editor of Investors Chronicle
The Investors Chronicle Isa Season special issue is on sale in all good newsagents from Friday