The Times - UK (2022-04-09)

the times | Saturday April 9 2022 61

Money

Be ready with the dates you worked
there and your national insurance
number. The government’s Pension
Tracing Service can help to reunite you
with your savings if your old employer
is no longer trading. You can also use it
to find personal pensions. You will need
the name of the provider to find the
contact details, however. If it has been
taken over and no longer trades under
that name, the database will recognise
it anyway and direct you to the firm
that now looks after your pot.
If you don’t have any luck there, try
the Unclaimed Assets Register from the
credit rating company Experian. This is
more comprehensive because you can
search for old shares and insurance pol-
icies, as well as pensions.

0 Save for your children
Saving early for your children can build
up a fund to help to pay for further edu-
cation or a house deposit.
Using a cash account for the longer
term doesn’t make sense because infla-
tion will erode the value of the money.
Consider a Junior Isa (Jisa) for tax-free
investing, where you can stash £9,000
each tax year until they reach 18.
You could even start a pension for
them. Up to £2,880 can be put into a
Junior Sipp for under-18s each tax year
to which HM Revenue & Customs adds
20 per cent, totalling £3,600. Your child
will also benefit from the compound
growth on their investments over
decades. A Junior Sipp allowance
comes in addition to a Jisa allowance, so

parents and grandparents can put

money away for when children are 18

and some for when they’re much older.

0 Consider salary sacrifice

As an employee you can give up a por-

tion of your salary in return for pension

contributions of the same amount. It

means that the money goes into your

pension before you pay tax or national

insurance and you could use this to

bring your taxable income below the

higher-rate tax threshold. You can also

use salary sacrifice for other benefits

such as travel season tickets or a bike —

ask your employer what’s on offer.

0 Consider backing a future unicorn

If you are in the enviable position of

having used up your pension and Isa

allowances you might consider utilising

the generous tax breaks offered on

investing in start-ups and younger

companies.

Venture capital trusts (VCTs) offer

upfront tax benefits with 30 per cent tax

relief. You can invest up to £200,000

There are about

1.6 million lost pension

pots worth £19.4 billion

— start the tax year on a high

into a VCT each year and get 30 per

cent of that back in tax relief, although

you cannot claim back more than you

owe in income tax for that tax year. To

qualify for the tax break you must hold

the investment for at least five years.

Many VCT-backed companies have

quickly become household names.

Some have earned “unicorn” status —

private companies with a valuation of

$1 billion or more. These include the

online car retailer Cazoo and the meal-

kit business Gousto. But remember,

investing in new businesses can be very

risky — that’s why there are tax breaks.

0 Explore EISs

You could also explore enterprise in-

vestment schemes (EIS), which allow

you to back small start-ups — either a

single company or a fund that holds a

cluster of firms. There is income tax

relief at 30 per cent and returns are free

of capital gains tax if held for three

years. It’s even possible to defer capital

gains tax should there be any due.

EIS investments offer a “carry back”

facility where you can elect for all or

part of your EIS shares acquired in one

tax year to be treated as though they

had been acquired in the previous year,

letting you make use of any unused

allowances. Investing in small compa-

nies is high risk, but you can apply for

loss relief if an EIS fails.

The maximum amount you can

invest is £1 million each tax year plus an

extra £1 million in any investments

deemed “knowledge-intensive” — in

other words companies that are carry-

ing out research, development or inno-

vation in a particular sector.

SJ and Liz Lee, who
are physiotherapists,
have just opened their
first stocks-and-shares
Isas after spending
years ploughing
their savings into a
cash account.
“We’ve come to the
conclusion it’s high

time we started

investing our money

for the future instead

of settling for returns

of almost nothing on

cash,” SJ, 40, said. “It

feels like a very

intimidating world

and selecting

investments is both

stressful and exciting.

But after lots of

reading and research

into the psychology of

investing as well as

how it works, we’re

now on the right road

to getting our money

working hard.”

The couple, who live

in Tynemouth in

North Tyneside, have

chosen to start with

the iShares Core

MSCI World Ucits

ETF, which costs

0.3 per cent and

invests in more than

1,500 stocks globally.

“We’ve started with

a broad fund with low

charges. As time goes

on we will add other

funds and some direct

stocks. The plan is to

choose recession-

proof businesses that

will prosper whatever

the weather.”

SJ and Liz are also

keen to start investing

for their children,

James, seven, and

Iris, four.

“We are in the

process of opening

their Junior Isas with

the same provider

we’ve used —

Interactive Investor.

We want to make sure

they have solid returns

on their savings too,”

Liz, 38, said.

“To be honest, we

now realise we should

have started all this a

long time ago. But

we’re looking forward

to getting more

involved with the

world of investing and

learning as we go.”