Investment and Money Making Ideas for the UK
UK Investment Ideas
Confused by the complexities of the UK savings and investment schemes and tax laws: PEPs; Pensions; ISAs; SIPPs etc.?
This article is all about some good investments available in the U.K. the ways to reduce your tax bill and improve your return: from simple saving accounts to more obscure investments like Zero Dividend Preference Shares and Investment Trust Warrants.
I have also written a separate (non-UK) article here:
Please see the links to my related articles below, which go into a lot of detail about each type of investment.
Disclaimer: Information in this and other linked articles is for general information only and is not intended to be relied upon in making specific investment decisions. Appropriate independent advice should be obtained before making any such decision.
Tax Free Investment
Some forms of investment are tax-free or at least have a reduced tax liability: Premium bonds; ISAs; Personal Pensions (and SIPPs); Gold Sovereigns and some have generous allowances. I shall deal with the tax-free products first.
The thinking person's lottery? Tax free prizes, your money back at any time and completely backed by the UK gouvernment, but are they still good value?
Despite the tax-free return and the complete safety of your investment these are looking less good now for anyone except a higher-rate tax payer.
See the full article:
ISAs (and PEPs)
Individual Savings Account or ISAs (formerly knows as PEPs - Personal Equity Plans) are tax free... well almost.
ISAs are probably the best tax-break available to most investors, both for cash and for equity/bond investment. I have written an article giving a full, in-depth analysis of ISAs and alternative investments.
Read the full article here:
UK Personal Pensions and SIPPs
Get a full income tax rebate on investments into a UK personal pension, but in exchange lose access to your money until you are 55 years old. Income from a pension is taxable when you take an income after retirement (unlike an ISA where the gains/income may be taken at any time)
Use your capital gains tax-free allowance with the following investments
Low cost investments similar to unit trusts, OEICs or Mutual Funds. They are generally not promoted by advisors because they don't pay commission and have lower annual charges - as a result they tend to outperform. There are other advantages and disadvantages.
Read the full article here:
Zero Dividend Preference Shares
Almost Crashproof? Absolute return?
Zeros are a safe equity investment with a target of achieving an absolute return - capital gain and no dividend makes them tax efficient for many. Zeros are shares in an investment company with a predefined end-date and value. The zero share holders are paid first before other classes of share holder making them safer:
Here is a full article about how to value and invest in zeros:
Investment Trust Warrants
Investment Trust Warrants are a derivative of investment trusts, usually issued on the launch of the IT as a sweetener for the initial investors: They are call warrants on the value of the IT, which can itself trade at a discount or premium to the underlying assets (usually a discount), so generally an IT will initially sink in value after launch, but the warrant gives a geared (leveraged) play on the value of the company, exercisable at a date some years in the future, but tradable in the mean-time via a broker.
Here is the full article about this rare derivative investments: