It is one of life’s certainties, but tax doesn’t have to get the better of you. Simply taking some time to understand which investment opportunities are the most tax?efficient can go a long way towards minimising the amount of tax you have to pay.

The important part, beyond deciding what to invest in, is to think about how you’re going to hold your investments. Choosing tax?efficient investments will often mean you’re able to keep a higher proportion of any returns you make.

You should, however, bear in mind that tax rules can (and undoubtedly will) change in the future. What’s more, the benefit of favourable tax treatment, such as that given to Individual Savings Accounts, will often depend on your individual circumstances.

Below we have outlined a few tax?efficient investment opportunities to consider this year.

Maximise Your ISA Allowance

An Individual Savings Account (ISA) is a bit of a no?brainer when it comes to effectively saving money. What’s more, if you maximise your allowance, you could save just shy of £40k (for a family of four) without having to pay tax on the interest.

Here’s how:

UK residents who are aged 18 and over can invest up to £15,240 each into an ISA (16 and over for a Cash ISA). Parents can fund a Junior ISA or child trust fund with up to £4,080 per child. This amounts to a total of £ 38,640 for a family of four before the 6th of April 2016.

And for those of you with adult children planning to buy their first home, it would make sense to gift funds to them so that they can invest in the new help?to?buy ISA. This first became available for a four?year period from the 1st of December 2015 to help first?time buyers gain a foothold on the property ladder.

The help?to?buy ISA allows Individuals, who are aged 16 and over, to save up to £200 per month (and up to £1,200 in the first month), to which the Government will add a 25% tax?free bonus, from a minimum bonus of £400 up to a maximum amount of £3,000 on £12,000 of savings.

Note: Income and capital gains from ISAs are tax?free, and withdrawals from adult ISAs do not affect tax relief.

Insurance Backed Bonds

Life is for living, and life insurance backed bonds can provide you with some extra money to do just that. Provided by major insurance companies, they offer relatively secure returns to investors, depending on underlying investments.

They also come with the added tax advantage that up to 5% of the original capital invested can be withdrawn each year with n o immediate tax liability.

After such withdrawals reach 100% of the original capital, Income Tax is then payable on further withdrawals or on surrender of the policy. Individuals whose level of income mean that they will lose their personal allowance and/or pay 45% Income Tax are likely to find the 5% tax?free withdrawals facility a particularly attractive option.

Some of the friendlier societies offer regular premium policies, which run for ten years or more, and can qualify for full Income Tax exemption on the gains accrued. However, since the 6th of April 2013, investment into such qualifying policies has been limited to £3,600 a year for all arrangements set up after the 21st of March 2012.

Any amounts invested in new policies that are in excess of the annual limit will therefore not qualify for the favourable tax treatment. What’s more, increases to existing policy premiums will be classed as creating a new non?qualifying policy, but if you have a policy from before the 21st of March 2012, it should be advantageous to keep it going until the existing maturity date.

Would you like to find out more about the benefits of insurance backed bonds? Contact one of our expert tax advisors today.

Offshore Bonds

Accumulating income virtually tax?free might sound like a dream, but by investing in offshore life assurance bonds it c an be a reality.

And as with UK bonds, up to 5% of the original capital invested can be withdrawn each year until the original capital has been withdrawn in full with n o immediate tax liability. Only once they are disposed of are they then taxed in full at your marginal rate.

While the maximum rate of Capital Gains Tax remains at 2 8%, alternative collective investments may be more attractive for short?term investment.

However, offshore life assurance bonds offer the flexibility to defer tax into a year when:

• other income is lower
• or until a year when income losses are available to offset the profits
• or a year when you are not tax?resident in the UK

Employer Tax Breaks

With price discounts and tax breaks available for taking part, joining your employer’s share scheme can be a great way to earn some extra tax?free income.

Where you can participate each year, plan carefully to use annual contribution limits and manage share purchases so that there’s a steady flow of potential share sales in future tax years, therefore allowing you to maximise the use of your annual capital gains exemption.

Shares acquired under share incentive plans (SIPs) or sharesave (SAYE) schemes have minimum holding periods. It may not be possible to hold such shares in an ISA, so any dividends received on the holdings will be taxable.

However, from April 2016 onwards, a new dividend nil rate band will apply so that the first £5,000 of dividend income is not taxed.

Before entering such schemes, it is critically important that you seek out professional advice. Speak with ad+ today to take steps to efficiently minimise your tax liability and effectively plan for the future.