open ended investments

Open Ended Investment Companies (OEICS)

Wrap up your OEICs – these are not nit wit youths as in oik, but quite useful investments.

The spring budget March 2017 has decreased the tax free dividend allowance from £5,000 per annum to £2,000. The £5,000 allowance will only exists for the 2017/18 tax year and from April 2018 it will be at the lower rate of £2,000.

If you have a portfolio invested in shares, either directly or via collectives like Unit Trust or Open Ended Investment Companies (OEICS), you need to use all available tax wrappers to shelter the dividend from income tax.

The obvious wrappers to use are Individual Savings Allowance (ISA) and Pension. Any dividend income on investments help within these wrappers is exempt from income tax. If you qualify for an ISA you can get £15,240 in this tax year and £20,000 next tax year.

If you qualify for a pension you can usually contribute £3,600 or 100% of your earnings to maximum £40,000 per annum to pension. Don’t waste your allowances – a bit of effort and planning can save a lot of unnecessary tax in the future.

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Sam Secomb
ssecomb@pentinsfp.co.uk

Chartered Financial Planner and Managing DirectorSamantha Secomb joined Pentins as their Chartered Financial Planner 2015 and is now a shareholder and director of the business.Samantha is a Fellow of the Personal Finance Society which is widely accepted as the premier qualification standard for advisers in this country. Having reached the top in her professional qualifications she is currently studying with Warwick Business School for her Master’s in Business Administration (MBA).

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