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With all this talk of tax avoidance and evasion in the news at the moment, people might feel they will be vilified for even thinking about doing their annual ISA. But let’s get things in perspective here. Tax avoidance and tax evasion are very different things! One is illegal and will see you being held at ‘her majesty’s pleasure’ and the other one is just good common sense.

Successive governments have put rules in place to allow people to mitigate a certain amount of tax – and the reason they have done this is to encourage people to make good decisions. Giving people tax breaks on savings (such as ISAs and pensions) is encouraging people to save money for the future and allow them to be financially independent and therefore not reliant on the state.

They also give good tax breaks for investing in Venture Capital Trusts and Enterprise Investment Schemes. Why else would people invest in high-risk, start-up enterprises, which quite often breed some of the greatest areas of innovation for all kinds of different industries? Where would Richard Branson, or James Dyson have been without a few people willing to invest in them? The Government is giving these tax breaks to give the economy the very boost it needs – private investment. Do all political Donor’s give money purely out of the goodness of their heart? Giving any major political party money has great tax incentives in itself. So be careful what you wish for Mr Milliband.

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  • Please Note

    VCTs are high risk investments and there may be no market for the shares should you wish to dispose of them. You may lose your capital.

  • Please Also Note

    Enterprise Investment Schemes (EISs) and Seed Enterprise Investment Schemes (SEIS) are very high-risk investments. An EIS/SEIS investment is usually concentrated in one single unquoted trading company. Often there is no market for the shares and it may therefore be very difficult to make a disposal. There is a strong possibility of the chosen company failing.

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