More and more of our female leader clients are expressing an interest in using their investments to make a difference for future generations, or the world at large! Using their money not just to secure a financial inheritance to be passed on, but also to help protect the planet for their children, support charities and other female leaders.
So let’s dive in to some options available.
ESG Investing
‘ESG’ – stands for environmental, social and governance and you may have seen it referred to as ‘socially responsible investing’ or as having an ‘earth portfolio’.
It looks at the sustainability and social impact of investing in a certain company. For example, an ESG investment portfolio would avoid ‘sin stocks’ i.e. companies engaged in things such as weapons, tobacco, fossil fuels and so on.
It’s becoming increasingly popular. Studies estimate that assets invested in ESG funds form between 30% to 40% of the $100 trillion of global assets under management worldwide. We believe this trend will continue as people turn to more sustainable ways of living.
At Cooper Parry we’ve also developed our own ESG portfolio that sits in line with our six guiding principles of investment. However, there are pros and cons to this way of investing. We’d discuss these with you if ESG investments are of interest to you.
Gifting
One of the ways to see your family benefit from your wealth and also make sure tax isn’t charged unnecessarily when you die is to consider giving away assets while you’re alive. You’re allowed to make some gifts without any tax being due after your death. We’ve summarised the main exemptions:
- £0 – Amount of tax due on gifts to your spouse or civil partner.
- £3,000 – Your annual exemption. The total amount you can give in a tax year while you’re alive. You can also carry forward your unused exemption from the prior year as well.
- £250 – Maximum amount you can gift an individual in a tax-year that hasn’t benefited from your annual exemption.
- £5,000 – The amount a parent can gift their child for their wedding.
- £2,500 – The amount a grandparent or great grandparent can gift for a wedding.
- £1,000 –The amount another relative or friend can gift for a wedding.
- £0 – Is the tax due on gifts to charities or political parties. Charitable gifting can form part of your will, regular gifting, gifting shares or even setting up a charitable trust. There are some valuable tax benefits of each option.
- Surplus income – You can make gifts from your surplus income (after allowing for the cost of your living), and the value drops out of estate tax.
Gifts given in excess of the above exemptions are generally potentially exempt transfers. After 7 years they fall outside of your estate and aren’t subject to tax on your death.
We won’t touch on trust planning here – but it’s another way of gifting your money, whilst maintaining control and managing tax. It can be really useful.
Gifting can be complex, to trust or to individuals and keeping clear records is key. It’s also important to consider how much you can afford to give away.
Women supporting women
Recent years have seen a huge rise in the number of women starting a business, yet female entrepreneurs can struggle to achieve funding when starting a business, with only around 1% in value of venture capital funding going to female founders.
You can support other founders coming to market by investing in start-up companies via Venture Capital Trusts (VCTs), Enterprise Investment Schemes (EIS) or Seed Enterprise Investment Schemes (SEIS). This type of investing can be both personally rewarding, with potential for high growth, and can be very beneficial from a tax point of view.
However, it is also seen as high risk due to the limited/lack of access to capital in the short term. It’s usually only suitable for investors in certain financial situations and you need to be prepared to lose the money you put in. [1]
Take advice
It’s important to take advice from a professional when considering an investment or gifting strategy to ensure it fits with your objectives, your tax planning strategy and of course the impact that you want to make. We can help with this.
If you’d like a free informal chat, please get in touch. We’d love to hear from you.
[1] EIS & VCT investment is usually only suitable for investors in certain financial situations. Don’t invest into these types of investment schemes unless you’re prepared to lose all the money you put in. They are high‑risk investments, and you are unlikely to be protected if something goes wrong.
Investing money puts your capital at risk. Past performance can’t guarantee what investments will do in the future. The value of a portfolio can go down as well as up, so there’s a chance you’d get back less than you put in. Any information contained within it is the opinion of the author and nothing in this document should, under any circumstances, be considered to be advice. You are recommended to seek competent professional advice before taking any action.
Tax and estate planning advice is not regulated by the FCA.
This information represents our understanding of law and HM Revenue & Customs practice as at (15/10/2023) and may change if legislation changes.
Cooper Parry Wealth is a trading style of Cooper Parry Wealth Limited, which is authorised and regulated by the Financial Conduct Authority. The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financialombudsman.org.uk. Registered in England no. 04220777. Registered office: Sky View, Argosy Road, East Midlands Airport, Castle Donington, Derby, DE74 2SA
