Top Tax-Free Investments to Consider

Having a diverse portfolio of investments will help secure assets and potentially bolster them greatly. The average UK household only holds £5,500 in savings, and typically, these savings are held in traditional saving accounts.

Whilst traditional banking is considered ‘safe’, it does mean people aren’t taking advantage of the numerous tax-free investment opportunities there are to grow their wealth almost exponentially.

Why is diversifying a portfolio important

Diversifying your investment portfolio means that because you’re spreading capital across more than one investment category, you’re better able to protect your assets should one of the sectors you’ve invested in crash.

Not only does a diverse portfolio help protect your assets, but it can also help increase your profit potential too – especially when you choose a tax-free investment method.

Top tax-free investment methods

Knowing how to increase your wealth in a tax-efficient way is a cornerstone to investing and it can have a huge impact on your overall wealth.

Here are some of our top tax-free investments you should consider to help grow your wealth and ultimately, give you the freedom to live your life.

Individual Savings Accounts (ISAs)

Perhaps the most widely recognised form of investment, Individual Savings Accounts, more commonly known as ISAs, are a great starting block for investors. Created by the government in 1999, ISAs are designed to encourage saving and investing thanks to their generous tax breaks.

If you’re serious about investing and want to grow your wealth, then a great starting point is the Innovative Finance ISA, the IFISA. An IFISA allows you to use your tax-free ISA allowance to invest in peer-to-peer lending. P2P lending allows you to lend money to borrowers and businesses, who then pay back the amount borrowed, plus interest.

Spread betting

If you’ve heard of forex trading, then you may have heard of spread betting. Spread betting enables you to place a bet on the potential future of a market. Because of its speculative nature, spread betting in the UK is exempt from both Capital Gains Tax (CGT) and Stamp Duty.

Just like betting on a horse doesn’t mean you own a share in a horse when you spread bet, you’re not buying a share of the company, you’re merely betting on how well it will perform in the future.

Enterprise Investment Scheme (EIS)

EIS offers investors the chance to invest in unlisted businesses, which is great considering the entrepreneurial boom we’re seeing post-pandemic. Because of the inherent risks associated with investing in a new/unknown business, tax relief is used to help offset this uncertainty.

The primary form of tax relief is 30% on the value of your investment, plus the ability to defer capital gains.