Global transitioning to a green economy is evolving surely and steadily, and there are substantial benefits to embracing renewable energy resources in 2014. Experts agree that sustainable development is the wave of the future as the global shift towards reducing our carbon footprint continues. Contemporary investments seek to capitalise on trends in this arena with a view to securing a space in this competitive and lucrative arena.
Ethical and environmental investments provide benefits via tax efficient savings through ISAs and other investments. ISAs are available to UK residents over the age of 18 and may result in shelter from personal income and capital gains tax. Green options are a unique way to ensure profitable investments which will simultaneously cost less in taxes.
In 2014 it is possible to invest up to £11,880 in ISAs. An upper limit of £5,940 is permitted in a cash ISA. The previous year’s ISA allowances can’t be carried over and there isn’t any limit on the total value of ISA investments. This means that quite large sums can be accumulated and they are held within tax-exempt savings. These investments can be as large as £1 million. Withdrawals are flexible, and in this case the investment remains tax-free. However once a withdrawal has been made from an ISA, this capital cannot be replaced.
Green Investments in 2014
There is a great range of green investment and ethical investment opportunities available under the ISA banner. Tax efficient savings are offered by leading investment funds. The vast majority of fund supermarket services offer ISA accounts, making it possible to build a diversified portfolio of green funds under an ISA umbrella.
Types of ISAs – Renewable Energy Investments
Forestry Investments
Forestry investment is becoming a popular alternative to traditional investment in stocks and shares. Forestry investments are outperforming alternative asset classes each year. Private investors now have access to some very lucrative forestry investment portfolios.
Renewable Energy Investment
A small dip in the renewable energy investment arena during 2013 has been followed by a steady climb in 2014, ensuring that this area remains a popular choice among investors who wish to benefit from ISA’s.
Cash ISAs for Tax-Free Investment
These ISAs are obtained through banks, National Savings and Investments, and building societies. These are deposit accounts where interest is paid. Interest rates may be fixed or variable. All interest accrued on these accounts are tax-free. This means that the higher your tax rate, the more you can save. Returns are low to moderate, so savings are not substantial.
Stocks and Shares
Stocks and shares ISAs allow investment in a variety of different options. These include shares, investment or unit trusts, open-ended investment companies, gilts, life assurance and corporate bonds. Investors should consult a financial adviser to avoid dangerous risks as these can be very complex investments. Returns are greater with stock and share investments with a consequent higher risk. Tax savings are higher than with a cash ISA. If you make cash withdrawal, you won’t lose your ISA allowance. Any income received does not form part of your individual capital gains tax. Any assets that produce income as interest are tax-free. Dividends are paid net of a 10% tax credit.
Venture Capital Trusts (VCTs)
Available since 1995, VCT’s were introduced with the aim of encouraging investment in unquoted companies. VCTs similar to investment trusts and are quoted on the London Stock Exchange. Private investors can invest in small to medium-sized unquoted trading companies in the United Kingdom, which would be usually unavailable. Professional venture capital managers are appointed by the VCT to select appropriate investments. VCT’s have been very lucrative on the whole, but this success has been offset by some stark failures. A five year holding period is required for these investments and there is no market for “used shares”. Investors need to ensure they know what exit procedures are for their investments.
Nigel Walters is an experienced property, investment, stocks and finance blogger; he uses his writing to try and educate people and tries to point them in the right direction when investing. At the moment he freelance blogs for companies like Emerald Knight Consultants but eventually he wants to have his own consultancy and website.
Marty Huggins
