Top tax planning ideas to improve your financial investments

Piggt bank savings
By James Rae, Investment Manager at Charlotte Square, Investment Managers

6 February 2017

It’s the often-arduous task of annual tax returns that inspires us to set new year resolutions for improved financial planning. If you put off this mighty task, and found yourself surrounded by a daunting pile of crumpled expense receipts, it might be time for a new financial planning strategy. James Rae, Investment Manager at Charlotte Square, discusses what financial investments are available for 2017 to make your financial planning thrive.

“The festivities are over and many people throughout the UK have experienced an annual, last minute, tax return panic - much to the frustration of their accountants. However, this annual scramble often stimulates thoughts on personal finances.  In particular, what financial tools can we use in 2017 to make our investments work harder,” says James Rae, discussing how investors and business owners can approach financial planning.  

Remember your ISA allowance

James Rae, Investment Manager at Charlotte Square, looks after tax efficient investments. He said: “One of the most important tools at an investor’s disposal remains an ISA.  With no tax on income earned or realised capital gains, an ISA is an efficient tax tool.  Remember to top up your ISAs now or lose this year’s allowance.”

AIM and Inheritance Tax

In addition to these tax breaks, an ISA can also be used to mitigate against inheritance tax by investing in shares listed on the Alternative Investment Market (AIM).  

James explains: “Many AIM stocks qualify for business property relief (BPR) meaning that an AIM portfolio can achieve exemption from inheritance tax when held for just two years and at time of death.  This option can prove to be particularly beneficial for investors who want to maintain control over their assets or have concerns over seeing out the seven-year gift rule.

“In our experience, many investors who have opened AIM portfolios have not only been looking for inheritance tax relief but also capital growth. The strong performance of business property relief qualifying AIM shares has flown under the radar as this group of stocks lacks index representation.”

Strong financial performance indicators

Many AIM businesses have developed into market leaders in their given niche. “What is also interesting is that while large cap stocks often struggle with top line growth a lot of AIM companies have no such concerns,” James noted.  

“Their smaller size means that the company can easily adapt to change and these businesses are often selling market disrupting products. However, many of the AIM shares that qualify for business property relief are not that small.  

“AIM is now a true junior market with a large variety of companies operating in different sectors and we think that it will continue to be a breeding ground for the giant UK companies of tomorrow.”

Not all investors should look to take part in AIM investments. James explained: “AIM investments are not suitable for all investors and are likely to be higher risk compared to stocks traded on the Main Market. The trading environment may be volatile and liquidity conditions can vary.

“We are Investment Managers rather than Financial Planners and so would always recommend that anyone considering AIM take separate advice before investing from an independent professional adviser or tax specialist to ensure that this type of investment fits within their wider financial planning objectives.”

Do your financial investments need an expert opinion?

Get in touch with Charlotte Square 

About James Rae and Charlotte Square

James Rae is an Investment Manager at ‘Charlotte Square’, an investment management boutique situated in the heart of Scotland’s financial centre and offering a highly personalised discretionary investment management service for a range of private clients, trusts, pension schemes, corporate funds and charities.  He is a member of the CFA Institute and graduated with a BSc Honours in Accounting & Finance from Bath University.

‘Charlotte Square’ is a trade name of Raymond James Investment Services Ltd (Raymond James) utilised under exclusive licence. Raymond James is authorised and regulated by the Financial Conduct Authority. With investment, your capital is at risk. The price of investments and the income from them can go down as well as up and neither is guaranteed. Nothing contained in this article constitutes investment, legal, tax, regulatory or other advice, nor should be relied upon in making an investment or other decision. The tax benefits described in this article are correct at the time of going to print and these may be subject to change by HMRC.

This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.


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