What next after maxing pension and ISAs?

[nyctoedi]

This last couple of years I’ve been able to use up to my full pension allowance and max out my (and my kids) ISAs. Mine are 1/3 cash IsA and 2/3 stocks and shares. I have definitely reach peak income and hope to be here for another couple of years (reasonable likelihood of redundancy although not with a huge payout unfortunately…not been there long enough) before rolling down to early retirement in say 10 years.
i have some cash savings (in ordinary savings accounts) but trying to figure out where it makes sense to invest beyond ISAs and pension in the most tax efficient way. Any thoughts on where you go next? (Not interested in premium bonds!)

General Investment Account (GIA). Use capital gains allowance to sell investments from that and buy within ISA wrapper (sometimes referred to as Bed & ISA).

VCT and EIS are also considerations but high risk.

Venture Capital Trusts

Investment Bonds

I've opened a SIPP for each of the kids. Even through they are just into primary school and can barely wipe their own arses they are each permitted to put £3,600 a year into a pension (so £2,880 cash and the pension provider claims £720 tax relief at 20% back from HMRC automatically). The money's obviously out of your reach (and theirs, until 57 as matters currently stand) but think of what 40 or 50 years of compunded growth will look like for them.

The other thing I've done is to fit solar panels and a storage battery to our house. The investment case stacks up on its own anyway, but the bulk of the return comes as savings on your electricity bill so outside the tax system. The amount you can sell back to the grid before it becomes taxable is, if I've understood it correctly, 20% of your own consumption. Even then, you can use your £1,000 trading allowance.

Junior SIPP for the kids. You still get (basic rate) tax relief so it's genuinely free money for them (in the sense that the kids are obviously not paying income tax)!

A lot would depend on your attitude to risk and investment time horizon.

As mentioned up thread, this could be a good place to park surplus funds.

PM if you'd like more details.

https://www.moneyhelper.org.uk/en/savings/investing/what-are-investment-bonds#:~:text=independent%20financial%20advice-,How%20do%20investment%20bonds%20work%3F,usually%20five%20or%20ten%20years.

Investments in gilts is a popular choice at the moment in your circumstances.
Pick low dividend bonds with a premium on the maturity value.
The bi-annual dividends are subject to income tax, but the capital gain on gilts is tax exempt. Plus you will know exactly the return you will receive on the bonds if you hold to maturity.
Building a bond ladder based on this strategy is also an option.

Wow, we've gone from pensions and ISAs to VCT's and Investment Bonds!!! VCT's and Bonds do very different things and are only suitable for certain sets of circumstances.

If you have used yours and your spouses full ISA allowances and utilised any carry forward allowance for each of your pensions for the tax year, I'd suggest that you are have sufficient wealth/income to warrant employing a financial adviser. The leap of previous posters to VCT's and Bonds underline the importance of speaking to an expert, especially given the figures we're talking here.

My usual suggestion, avoid SJP, but any regulated planner should be able to help you. Maybe schedule an initial meeting which are 99% of the time at no cost, with a few firms to see who you like.

Remember you have a £500 allowance for dividends and £3k for CGT. So you can use a GTA without paying tax if you’re careful about it. (And of course investing is still worth doing even if you pay tax- better a taxed gain than no gain at all).

Premium bonds are tax free.

GIA

VCT is a very different thing!

What about bonds? https://optimly.co.uk/guides/stocks-or-bonds.html