Tax wrappers 'important to investors'

Date: 23rd November 2009

Savvy consumers can save large amounts if they implement the correct tax strategy, Fidelity FundsNetwork has pointed out.

The financial experts said that returns on investments could be 161% higher, depending on which tax wrapper is chosen by a client.

Fidelity FundsNetwork's report also highlighted the recent changes to tax laws, which could have noticeable effects on many people's financial affairs.

These include the recent increase to the annual ISA allowance from £7,200 to £10,000 for over-50s - a change which will be extended across all age groups from April 2010.

People earning over £150,000 a year are also to face a new income tax of 50p in the pound and the tapering of tax relief on their pension contributions.

A major concern of high-earners will be whether or not a specific return from an investment is classified as income - taxed at 50% - or as capital gains - taxed at 18%.

Paul Kennedy, head of tax and trust planning at Fidelity International, said: "An inefficient tax wrapper simply means giving part of the investment return to the Government where that was not necessary.

"It is a simple fact that the choice of tax wrapper affects what goes back into the client's pocket. It's such a shame that hours can be spent in selecting the right assets and funds with the client to then be 'robbed' of some of that underlying investment return through poor tax planning."

Posted by Jacob Williams