Money_TreeTimes are hard for savers and investors at the moment. Interest rates have been incredibly low for some time now, and people are being punished for looking after their money. However, instead of leaving your capital at the mercy of high street savings accounts, it may be time to invest in a VCT.

What is a VCT?

A venture capital trust is a publicly traded company that invests in start-up firms and unlisted businesses. They provide much-needed capital for expansion and growth, and in return they get portions of the businesses they invest in. You can buy shares in these trusts, and grow your capital through the value of those shares. And just like any other type of public company, your shares will earn you a steady stream of dividend payments.

Avoid income tax

When you earn an income from dividend payments paid by regular companies, you are liable for income tax. However, the special exception afforded to a VCT investment means that any income you earn through dividends is completely tax free. If you spread your capital across several VCTs through the same provider, you could be able to earn a very healthy income whilst escaping the clutches of HMRC.

Leave more to your loved ones when you’re gone

Inheritance tax currently stands at 40 percent, and it kicks in on estates over £325,000. That may sound like a lot, but add an average house in the south of England to any inheritance, and your loved ones could already be looking at losing a hefty chunk of their legacy. However, invest in a trust of this type, hold your shares for at least two years before you die, and you can leave your investment to loved ones without your heirs being liable for inheritance tax.

Avoid capital gains tax

Venture capital trusts look for potential, great ideas and motivational leadership. And because they invest at the very early stages of a company’s development, the returns can be significant. In normal circumstances, if you were to sell your shares at a profit, you would be liable for capital gains tax. However, because the government is keen for savers to plug the investment gap left by major banks, any profit you make will be exempt from capital gains tax. As these schemes often involve many years’ of share growth, the tax you could save is significant.

Get back a slice of your income tax

Of course, venture capital trusts give you the opportunity to grow capital and earn an extra income – and those benefits alone are reason enough to get involved. However, perhaps the most eye-catching benefit involved is the ability to claim a tax rebate from HMRC.

You can claim up to 30 percent of your investment back as an income tax rebate – as long as you have paid at least that much in tax. For instance, if you have invested £10,000 in VCTs in a financial year, you can claim up to £3,000 from the tax man.

Young and ambitious entrepreneurs have fantastic business ideas in the fields of technology, renewable energy and healthcare. Unfortunately, the reticence of the banks to lend after the banking crash of 2008 has meant much of this potential has been lost. The government has moved to improve this chronic lack of credit by providing investors with some very lucrative tax benefits. Make your hard-earned capital work for you, and you can cut your tax burden in the process. It makes sound financial sense.

No Comments Mich on Apr 9th 2014

HRB horizontal 376C_BLACK Canadians get a big break when we sell our homes.

Complaining about taxes is almost a sport in Canada, especially when we look to our U.S. neighbours for comparisons. But there are some areas in which we actually win the tax race, and one of these is our Principal Residence Exemption provision.

Americans, for example, pay capital-gains tax on the sale of their residence for any amount exceeding $250,000. In Canada, there is no monetary limit on the size of the capital gain that can be excluded from income tax following the sale of a principal residence. Full capital-gains taxes apply to the sale of other properties, so the designation of a principal residence represents significant savings.

There is one downside: Canadians cannot claim a capital loss if money was lost on the sale. But real estate typically goes up in value, so this is rarely an issue.

So what is a principal residence? For tax purposes, it is simply the home you tell the Canada Revenue Agency is your main abode. You must occupy it at some time during the year, and you can actually choose a seasonal residence such as a cottage if that saves you some tax dollars. The occupancy requirement must be met for each year you want to make the designation.

There are some restrictions, of course. Only one property can be claimed as your principal residence, regardless of how many properties you occupied during the year, and only one can be selected per family unit. (A family unit includes your spouse or common-law partner, unless you were separated throughout the year, and children younger than 18 who are themselves not married or common-law). If you have more than one property, you select the principal residence once per year. That means you can wait until you sell a property to decide if it was your principal residence that year.

If you are lucky enough to own a large property, there is a size limit on the savings: if your land is larger than 0.5 hectares, the excess portion will usually not be covered by the exemption. If you can demonstrate that all that space is necessary for the use and enjoyment of the place as a residence or that there was an external factor—such as a minimum lot-size restriction when you made the purchase—the government may grant an exception.

The rules become more complicated if you convert a property from personal-use to an income-producing use. If, for example, you moved out of a house and began renting it, the tax authorities will consider it sold for its fair market value at that time. But it is possible to elect for the change of use not to have officially occurred and defer the disposition until you actually sell the property. This election also allows you to continue to designate the property as your principal residence for up to four years, even though you are no longer occupying it, or for six if your employer moved you.

The catch is that you must still report the rental income and you cannot claim a deduction for capital cost allowance if you want the election to continue in effect. The election must be made with your tax return for the year in which the change of use occurs.

If, on the other hand, you convert a rental property to your principal residence, it will be considered as sold for market value on the day you make the designation. And again, there is an option here: you can elect to defer the capital gain resulting from the deemed disposition until you actually sell the property.

The ins and outs of the principal residence rules can be confusing. But most people own only one property and actually live in it, so for them the process is simple: there is no additional tax bill on the profit made when a house is sold. See the CRA’s Principal Residence page for any forms you need. Once you own multiple properties, it is probably best to seek the help of a tax professional or use tax software.

Consider an online program like H&R Block’s Tax Software (www.hrblock.ca), which will identify your tax situation and calculate deductions or credits as you go. Or if you would rather leave it to an expert, drop by an H&R Block office. A tax professional will even review your previous returns for free.

Comments Off Mich on Mar 18th 2014

The following is a guest post by Totally Money.

Did you overspend on the holidays?  If so, don’t despair.  It happens to the best of us at least once, and for some of us, more than once.  If there’s one time when it’s easy to cave into spending peer pressure, it’s the holiday season.  After all, you don’t want to be seen as the one giving a skimpy gift when others are giving generously.

If you’re facing a stack bills, hold your head high and know that with a few months of discipline, you can dig your way out and make wiser decisions next holiday season.

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1 Comment Guest on Jan 10th 2014

Canada money

$20 Bills, image src:AFP

Irresponsible and unmindful spending leads to debt. Nowadays, people prefer to use their credit cards in purchasing instead of cash. Because of this, they tend to overspend and abuse the purchasing power their credit cards hold. Only when this unconscious habit has been translated into accumulated credit card notification letters do they realize their overindulgences.

It does feel less painful and easier to swipe a credit card instead of taking a few $20s out of the wallet. At the same time, that pain will be felt once the bill arrives in the hundreds of dollars!

Fortunately there are ways to avoid a great deal of debt. By employing smart purchasing practices, you will be able to prevent yourself from experiencing impending financial anxieties, as well as cram for debt relief programs that would help you save your finances. As a consumer, it is anticipated that you know your spending limits whether you use cash or credit card. To help you practice smart spending, here are simple suggestions to help you avoid debt and improve your finances. Read the rest of this entry »

2 Comments Guest on Nov 2nd 2013

OIC_noranda_solar_houseGenerally, most of us want to sell our homes for as much money as possible so that we can comfortably begin a new chapter in our lives. According to USA Today, ‘green’ homes sell for up to 10% more than those that aren’t so environmentally friendly, but what’s the reason behind these statistics?

‘Green’ Changes Can Look Good

Most people aren’t yet so concerned about the environment that they’d compromise on style in order to be ‘greener’, but as eco-friendly features are becoming more and more aesthetically appealing, it seems that people are willing to embrace ‘green’ living. Environmentally friendly features in a home, such as wooden flooring from a renewable source, can become an attractive selling point for a property. The ‘green’ appeal of a home can be extended into the garden too through the installation of a vegetable patch for growing produce. It adds a bit of interest to the property’s outdoor space and has a practical application that prospective buyers are likely to love.
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3 Comments Mich on Oct 14th 2013

6354095089_3ca0509311_m3There are so many things that affect the stock market, some of which may be obvious, while others are not quite so visible.  Typically, any movement in oil prices, inflation rates, employment rates or interest rates will affect the stock market. Additionally, wars, company mergers, company buy outs, bad company reports and natural disasters affect the stock market. However, it is often overlooked how tremendous of an impact the property market can have on the stock market.

Want to get involved in the stock market, but find yourself asking “How do I buy shares?”. Check out Etrade today for a quick start guide.

The Relationship between the Property Market and the Stock Market

The key link between the property market and the stock market is the interest rates.   Most people cannot afford to buy houses outright. Therefore, they must acquire loans from banks or financial institutions to pay for their mortgage. The interest rate is what borrowers have to pay the lenders for using their money, in addition to the amount they gave them to use for their mortgage, and when the interest rate is high, borrowers will thus pay higher interests on their loans.

What Leads to High Interest Rates?
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Comments Off Mich on Oct 4th 2013

rtaImage-300x2021Trading can be a highly stressful environment and it is one that is fraught with risk. Many people earn substantial amounts through trading, but there are numerous risks too. Unfortunately, it is impossible to completely eliminate these risks but, there are several ways that you can manage and minimise them. Binary Options are one of the main methods that people use to trade in order minimise the inherent risks associated with forex.

Binary Options Explained

Essentially, when trading using Binary Options, you’re making a directional decision on the price of an asset. For example, if you were trading EUR/GBP as a currency pair, you’d have to decide whether the price of the euro was going to go either up or down against the value of the British pound.

This decision is made over a ‘session’. Put simply, a ‘session’ is simply the timescale that you’re making the decision over and this can range from anywhere from under a minute to a year, As well as this, the timescale is completely up to you.

When your session expires you can either win, lose or breakeven depending on how the markets have moved. Unlike some traditional trading platforms, Binary Options are traded for a ‘fixed return’. This means that whether the price of the euro in the previous explanation would have gone up 1% or 15% you would receive the same return.
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1 Comment Mich on Sep 28th 2013

investing in real estateThis is a guest post written by Juliana Weiss-Roessler.

Buying real estate can be a risky endeavor, but if you do your research and invest wisely, it can really pay off in the long run. Buying a stable property and renting it out can give you a good source of additional income for relatively little effort, and if you’re an investor, it can help you diversify your portfolio.  Now is actually an ideal time to invest; the housing market is beginning to recover, but interest rates and housing prices are still generally low. Before you go jumping into the world of real estate investment, though, you need to look at the costs and benefits of buying a property. Here are a few things to consider.

Look for a property with a positive cash flow. This may seem obvious, but you’d be surprised how many people decide to invest in an expensive property that won’t start paying off for at least 10 years (more on that in a second). You need to make sure that the income you’re earning from monthly rental is enough to cover all expenses, including the mortgage and any necessary home repairs, so that you’re ending up with a positive cash flow. Remember that if the money you put into a house was sitting in a bank, it would be earning interest—your goal with a real estate investment is to be making more than you would if that money were just sitting in the bank.
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2 Comments Mich on Sep 4th 2013

patent exampleOne could be forgiven for presuming that patent wars have reached their peak in 21st century super-technology disputes, commonly referred to as “the smart phone wars”. However, a historical examination of patent wars reveals a very different, and somewhat surprising, picture. Understanding patent wars to include their litigatious element, as “battles between companies or individuals to secure patents through litigation, either offensively or defensively”, today’s patent wars seem light in number compared with those in history. However, a historical perspective shows that the complexities of patent disputes, both legal and technological, show amazing similarities between then and now.

Since much patent litigation is still solved in the jurisdictions of the U.S.A. this is a good starting point for examining the history of patent warfare. 1790 saw the introduction of the first patent law but it was the dawn of the US industrial revolution that brought the upsurge in patent disputes: the period c.1850 – 1900 is the half century when patent wars really flourished.

The first piece of technology that struggled to protect itself against copy-cat versions was the sewing machine. Elias Hunt had patented his version in 1846 but in 1850 Isaac Singer was pursuing his claim. The issues present in the 1850’s are interestingly similar to those in today’s high-technology patent wars: then many over-lapping patents covering single but similar products were issued. Even then the accompanying law suits were high profile, expensive and taking place in multiple venues.
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4 Comments Mich on Aug 19th 2013

7027601297_5e90a918e2_mThe following is a guest post.

For many of us the wait between our paydays can seem like an incredibly long time to be with little or no money; often we will have to scrimp and save in order to have enough to go on those work nights out or buy that pretty blouse. However, if it’s a friend’s wedding it simply isn’t always viable to miss it and so people end up resorting to loans.

Although loans aren’t exactly a problem, they can be a big investment to make when you only need £200+ to buy your outfit for the big day and have your hair done. Furthermore, if you have the misfortune of having a bad credit history then taking out a loan becomes even more of a challenge. Therefore, why not use cash loans from specialists that are created for these reasons; Cash Window is a new cash loan provider that should help make that wait between being paid a lot easier.

Their innovative way of approaching cash loans means that you will be in touch with fast cash whenever you need it online, in store and on mobile. This range of coverage means that you can either have the money paid directly into your bank, or you can collect the cash in person from a store near you. This latter option is particularly useful if you’re in an even bigger rush to have that extra cash close at hand.
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1 Comment Guest on Jul 22nd 2013

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