ARTICLE · 12 APRIL 2007

Boost For Higher Rate Taxpayers

Smith & Williamson

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Certain cash deposits offer advantages for people in higher tax brackets. The best fixed and variable deposit rates currently available exceed 6% per annum gross. It’s an attractive headline rate, but it must be remembered that for higher rate taxpayers this equates to a net return of 3.6% after tax.

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Certain cash deposits offer advantages for people in higher tax brackets.

The best fixed and variable deposit rates currently available exceed 6% per annum gross. It’s an attractive headline rate, but it must be remembered that for higher rate taxpayers this equates to a net return of 3.6% after tax.

With this in mind, higher rate taxpayers should be aware that it is currently possible to invest in cash deposits and get much better net returns.

For example, offshore bonds from life assurance companies allow investments in a wide range of cash deposits at more competitive rates. Whilst many people perceive the charging structures of these products as prohibitive, offshore bonds can offer distinct tax advantages which, in appropriate circumstances, increase equivalent gross returns to more than 8% for higher rate taxpayers.

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