The most tax-efficient investments in the UK

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Working in accountancy comes with many challenges. Often these professionals might even have no time to manage their own financial arrangements. As high earners, accountants should have a tax-efficient investment strategy because financial planning for accountants might not come as naturally as you might think. There are a number of ways that these individuals can invest tax efficiently, each with their own focus and unique benefits. Below, we’ve collected some of the most tax-efficient investments in the UK. These investments give investors the ability to choose an approach that best suits their priorities and personal circumstances.




Individual savings accounts were first introduced around the end of the 20th century and were set up by the government to allow taxpayers to save money by offering them large tax breaks on their savings. For this reason, these investments are typically used by young people looking to buy their first homes but they are always a great alternative or reinforcement for a personal pension.




By the time many of us reach pensionable age, it’s likely that the state pension will be a thing of the past. As such, it’s never been more important to ensure you have personal or business pensions set aside. Pension pots are allowed to grow in a tax-free bubble and are generally perceived as being retirement nest eggs.


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Venture capital schemes


A riskier but potentially more lucrative alternative to a pension, a venture capital scheme allows you to invest in a range of innovative businesses while retaining the same tax breaks you’d get from a pension. This is a great route into investment if you don’t want to get involved directly, though for experienced investors the more hands-off approach might seem a little bit limiting.




Enterprise investment schemes and seed enterprise investment schemes are both different flavours of venture capital scheme. The former exists to promote investment in early-stage, unlisted businesses while the latter provides support for just the first £150,000 of external equity capital a business raises in the first two years. The latter is comfortably the riskier of the two and with EIS, all shares are eligible for loss relief if the investment doesn’t yield a return. However, with greater risks often comes greater rewards.


Venture capital trusts


VCTs allow for a wider range of investment opportunities, including much later stage businesses. Another benefit of VCTs is that relief of up to 30% can be claimed upfront and growth isn’t subject to capital gains tax. A VCT is a much more hands-on investment and is the way to go if you want to have direct control over where your money goes. But then that could also turn into another job. Whatever investment you make though, a financial planner should always be sought for assistance.


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