Why thinking beyond the basics can level-up your retirement

Authors: Shaz Bishop & Imogen Congdon

For many of us, retirement planning feels like a dual journey: accumulating wealth before retirement and decumulating it afterwards.

While pensions and ISAs form the bedrock of our retirement plans, advanced tools like offshore bonds, Venture Capital Trusts (VCTs), and the Enterprise Investment Scheme (EIS) can enhance flexibility – for both pre-retirees maximising growth and retirees optimising income.

Pensions have their limits

If you’re a higher earner, pensions provide valuable tax relief, but only up to a point. For the 2025/26 tax year, you can claim tax relief on pension contributions up to £60,000 annually. This reduces to an amount between £10,000 and £60,000 if you earn over £200,000, which is called the tapered annual allowance. Because of this limit, high earners find they need additional investment strategies to secure the retirement they want.

“Many of my clients are high earners who’ve hit the limits on how much they can pay into pensions,” says Shaz Bishop, a wealth manager at RBC Brewin Dolphin. “They’re looking for alternative ways to invest and manage money more tax-efficiently.”

ISAs are another tax-efficient tool to be used in addition to your pension. In the 2025/26 tax year, you can invest up to £20,000 into a cash or stocks and shares ISA. All returns on investments in ISAs are tax-free, and you have the option to split your £20,000 allowance between different types of ISAs.

How to maximise your retirement income

As you move into retirement, how and when you take income becomes increasingly important. With work winding down, you need the money you’ve saved to stretch as far as possible, and that means managing how much tax you pay as efficiently as possible. This is particularly important at the start of your retirement when you may still be a higher or additional-rate income taxpayer.

While you can draw an income from your ISAs and take up to 25% of your pension as a tax-free lump sum (capped at £268,275), beyond that you’ll pay income tax.

This is where additional investment wrappers can play a role. These are products that hold your investments – whether that’s cash, shares or funds – and have certain tax reliefs.

Beyond ISAs and pensions, individuals who regularly max out their pension allowance, ISA contributions and capital gains allowance, can explore additional tax-efficient ways to grow wealth. These include:

• Offshore bonds (also known as international bonds)
• Venture Capital Trusts (VCT)
• Enterprise Investment Scheme (EIS)

“It’s about complementing, not replacing, your core portfolio,” says Imogen Congdon, a wealth manager at RBC Brewin Dolphin. “These wrappers give you more flexibility and diversification.”

Offshore bonds

Offshore bonds operate in a similar way to ISAs and pensions in that they are tax-efficient wrappers for your money. The main difference is they’re held outside of the UK – typically in the Isle of Man or Ireland.

Offshore bonds let you hold a variety of investments, but it’s how the gains are treated for tax that allows them to prove useful. Investment returns generated by the assets in the bond are not subject to UK tax until a chargeable event occurs. You can also withdraw up to 5% of your initial investment annually without triggering an immediate tax charge. Income tax only applies once your withdrawals exceed this allowance.

“One key advantage of offshore bonds is that any unused withdrawal allowance can be carried forward to the next tax year,” says Bishop. “This deferral can significantly benefit higher and additional-rate taxpayers, who may choose to delay paying tax until their circumstances change.

“For example, in retirement, you might move into a lower tax band or relocate abroad, resulting in a lower tax rate. Deferring tax can also help investors who’ve already used their annual capital gains tax allowance.”

Venture Capital Trusts

VCTs also offer attractive tax benefits, but their tax treatment is changing soon.

Investors receive 30% income tax relief on investments of up to £200,000 per tax year if they invest before April 2026, after that the relief is being cut to 20%. Any profits or dividends are free from capital gains and income tax too. To qualify for the income tax relief, you must hold your VCT shares for at least five years. After that, you can choose to sell and reinvest to claim further relief.

“VCTs are useful wealth planning tools because they provide tax-free dividends,” says Congdon. “It can remain invested, generating tax-free returns, which is another good diversifier for retirement income.”

With a VCT, your money is invested in small or early-stage businesses that aren’t listed on the stock market. This means they’re higher risk as many firms fail in their early years – that’s why VCT investors can claim tax reliefs. That said, there’s also the possibility of big rewards with the firms that do well.

Enterprise Investment Scheme

The EIS shares some similarities with VCTs. It’s designed to encourage investment in start-up and early-stage companies, so it provides generous tax reliefs to offset the higher risks involved.

Investors can claim 30% income tax relief and defer capital gains tax if they hold their investments for three years; they can also benefit from inheritance tax advantages after holding their investments for two years. You can invest up to £2 million a year through the scheme.

“With EIS, you also have the option to recycle,” says Congdon. “After the three-year holding period you can sell, reinvest and claim the tax relief again.”

Considering your options

These structures can work well as part of a broader retirement plan. However, these are long-term investments with exposure to early-stage businesses and all the volatility that can bring. So, you need to ensure they are the best fit for your personal situation and needs and ensure you have adequate money held elsewhere to cover any short or medium-term expenses.

As Congdon advises: “Before investing in EIS or VCTs, I’d usually ensure clients have a healthy amount of funds available in a general investment account as that’s more flexible.”

With the 2025 Autumn Budget bringing tax to the forefront of all our minds, end of year bonuses being paid and the end of the tax year on the horizon, now is a great time to review your planned transition from accumulation to decumulation. Your wealth manager can help you assess whether options such as VCTs, EIS or offshore bonds could complement your existing plans.

 “Make sure they fully understand your financial objectives and what your retirement goals are,” says Bishop.

Congdon adds: “Don’t dismiss your pension either. That’s often the most efficient way to build up a retirement portfolio and it’s going to give you excellent tax relief. Only once that’s done, would I then consider advanced investments such as VCTs or EIS.”

The right approach will depend on your circumstances, timescale and attitude to risk. Your wealth manager can work with you to establish whether these retirement tools are suitable for your needs.

About the author

Shaz Bishop

Director, Wealth Manager

Shaz advises private clients across a wide range of financial planning areas, such as tax-efficient investment, pensions and retirement planning, investment planning, inheritance tax planning, trusts and offshore investment.

Imogen Congdon

Financial planner

Imogen joined Brewin Dolphin in 2022 and is a Financial Planner in the London office. She creates financial plans and advises private clients in the accumulation phase leading up to and during retirement. This includes pension, tax planning, inheritance tax and protection.

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EIS and VCT investments are considered high risk investments. They are only suitable for UK resident taxpayers who can tolerate higher risk and have a suitable timeframe for investment. Tax reliefs are subject to a minimum investment period and cannot be guaranteed. The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute financial planning, tax, or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Information is provided only as an example and is not a recommendation to pursue a particular strategy.

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